Retail discounts deepen in December in bid to lure shoppers

Shop prices declined 0.4% year on year in the period from December 2 to December 6, significantly below the 12-month average of flat shop prices, and in line with the six-month average price decline of 0.4%.

Non-food retail prices fell 1.5% during the period, a steeper decline than the 12- and six-month average price decreases of 0.9% and 1.5% respectively, according to the BRC-Nielsen Shop Price Index.

Food inflation held steady at 1.4%, below the average 12- and six-month respective increases of 1.7% and 1.5%.

Fresh food inflation accelerated to 0.8% during the period, up from 0.6% the previous month but below the 12-month average price increase of 1.2%.

BRC chief executive Helen Dickinson said: “Shop prices continued to fall in December as receding inflationary pressures, weak consumer demand and intense competition combined to keep price increases at bay. 2019 was a particularly challenging year, with historically weak sales growth. Food inflation was steady as pressures from the global market trickled down to the consumer; however, at 1.4% it was a modest increase compared to historic inflation rates. As non-food retailers competed for discretionary spend, they have felt the brunt of weak sales. It is no surprise that December non-food prices fell significantly below the 12-month average for the fifth consecutive month as retailers pushed discounts in one last attempt to entice Christmas shoppers.”

Nielsen head of retailer and business insights Mike Watkins added: “The competition for the discretionary spend of shoppers intensified in December and discounts were deeper and began earlier, as retailers had to work even harder to keep customers shopping due to weak consumer demand. The continued deflation in non-food may have helped sales on the high street, however many supermarkets faced with weak volume growths reduced prices in the run-up to Christmas to give a short-term boost to sales.”