Lower Food Prices Expected to Stimulate Christmas Trading

The British Retail Consortium is predicting a strong Christmas trading period for food retailers due to lower prices.

While shop prices in general have been in deflation for 19 consecutive months now, this is the first time since 2006 (when BRC records began) that deflation has been reported in the food sector during November.

Deflation has affected both the fresh and ambient food categories, with prices falling 0.3% and 0.2% respectively since last year.

These latest figures are said to be the result of the ongoing price war with supermarkets, along with falling prices for commodities such as oil that has led to a reduction in food production and transport costs.

High street shops expected to benefit from increased momentum

While there has been a slow start to the festive trading period, with retailers having to rely on promotions and discounts to entice shoppers, the low prices are expected to considerably boost sales during December.

Helen Dickinson, Director General at the British Retail Consortium, said “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.”

Another major factor indicating strong Christmas spending is the increase in real wages for the first time in five years.

Miss Dickinson added: “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 ahead of us.”