• Shop prices down 2% in December
  • Clothing prices fall 6.4% as mild weather has an impact
  • Food prces down 0.3%

Prices in British stores continued to fall in December, as retailers resorted to aggressive discounting in order to woo customers.

The British Retail Consortium (BRC)-Nielsen Shop Price Index revealed that shop prices in December were down 2% on last year’s levels.

It noted that food prices fell 0.3% during the month, the same rate of decline as November. Non-food prices dropped 3%, compared to a 3.3% fall in November.     

The decline in general merchandise prices was largely down to reductions in clothing, footwear and electricals.

Prompted by the mild weather, clothing retailers heavily discounted during December, with prices plunging 6.4%. In other categories, electricals dropped by 4.2%, and DIY, gardening and hardware goods were 4% cheaper than a year ago.

Shoppers reap rewards

BRC chief executive Helen Dickinson said: “Prices in Britain’s shops have continued to tumble, this month by 2%. For the last two years and eight months, customers have been able to fill their baskets, whether virtual or physical, and pay less for their goods than the year before.

“This is an incredible run of good fortune for shoppers who’ve been preoccupied with picking up presents for family and friends, as well as themselves ahead of the holiday season.

“With retailers continuing to invest in price, relatively low commodity prices and intense competition a hallmark of the industry, we can expect falling prices to continue in the medium term.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “We can expect the current levels of deflation across the retail industry to continue for the first half of 2016. There is little upward inflationary momentum from global commodity or oil prices and locally, the price war in food retailing looks set to continue.

“After the unseasonably mild autumn and early winter, many non-food retailers will use price cuts and targeted promotions early in the year, to help sell through and to benefit from any rise in real wages.”