Annual high street inflation at record low

The British Retail Consortium once again called for the Bank of England to face up to the issue of cutting interest rates, following its latest pricing figures. Retail prices on December's Pricing Index were cut for the third consecutive month, down 1.41 per cent on the same period a year ago. However, the BRC said that flash price promotions on selected goods made it difficult to measure overall cutting activity accurately.

The biggest cuts were to be found in the footwear market and for big-ticket items. Prices of consumer electronics have also dropped over the year. Food prices were discounted for the holiday period to take advantage of higher volumes.

BRC director-general Kevin Hawkins said: 'The disappointing Christmas sales released earlier this week by the BRC indicated high levels of promotional activity throughout December, as many retailers were forced to cut prices to boost trading. This has sent annual high street inflation to a record low. The Bank of England cannot ignore the fact that the weak level of consumer demand and inflation on the high street is not a problem for the economy. With retail price inflation at such low levels and consumer confidence so fragile, dodging the issue of cutting interest rates to help ease consumer blues is no longer viable.'

For a more detailed analysis on the effects of price deflation on the retail sector, turn to pages 24 and 25 in the latest issue of Retail Week.