British Retail Consortium reports prices down as Christmas sales begin

The BRC says deflation is driving sales.


Food reported annual deflation for the first time since the series began in December 2006, falling 0.2 per cent in November.

Non-food deflation slowed marginally to 2.9 per cent in November from 3.1 per cent in October.


BRC director general Helen Dickinson said: "Food prices were deflationary in November - the first time since our records began in December 2006. Non-food prices also fell, compared with last year, meaning overall shop prices have been deflationary for 19 consecutive months. November equalled the record low deflation of 1.9 per cent reported in July 2014.


"We also saw the first rise in real incomes for over five years.  Downward pressure from falling shop prices pushed the overall rate of inflation in the economy below the rise in average wages.  With the recovery in the labour market robust, the outlook for further rises in real incomes looks positive. 


"Falling commodity prices, particularly oil, suggests the outlook for inflation remains benign.  The price of oil, a near five year low, has a significant impact on the costs of producing food, impacting everything from the cost of feed to transport.  Given the intensity of competition in the food sector, these savings have been passed on to consumers in the form of lower prices.  The strong Pound has also helped keep prices low as imports are now cheaper and it’s worth remembering that the UK gets roughly a quarter of its food beyond its shores.


"At the same time, we’re seeing the big supermarkets investing in price cuts worth millions of pounds during a hugely competitive period in the food market. With food prices down, wages up, a highly competitive market keeping inflation low; and Christmas around the corner, there are plenty of good reasons to assume a strong trading period lies just head of us".


Nielsen retailer and business insight head Mike Watkins said: " It`s been another slow start to Christmas trading and momentum on the high street has been reliant on retailers promoting and running `discount days` to drive shoppers into store. With little inflationary pressure we anticipate the good festive deals to continue and the savvy Christmas shopper can expect some very competitive prices across food retailers, in particular for fresh and seasonal foods, where some prices are lower than last year."

DIY, gardening and hardware sales were slow according to BRC.



November was 1.1 per cent down on November 2013.  Sales were 1.8 per cent ahead of October 2014. October was 2.7 per cent behind October 2013 and 0.5 per cent down on September 2013.

Meanwhile, Waitrose has seen a 5.2 per cent rise in sales for the week to 22 November, which almost matches the 5.6 per cent increase in the last 17 weeks.

Christmas baking ingredients led the way, up by up to 28 per cent, while Christmas cakes are up a 145 per cemt, Christmas puddings sales rose by 45 per cent and Stollen by 65 per cent.

Cards, crackers and wrapping paper which saw sales rise 17 per cent. Festive wreaths and garlands jumped 71 per cent, while decorations, such as Christmas lights, were up 63 per cent.

The recent Black Friday and Cyber Monday on 28 November and 1 December saw footfall rise 7.2 per cent on the High Street on the Friday but fall 8.8 per cent on the Saturday compared to the same days in 2013.

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