Shop price inflation falls for 20th consecutive month in December

Deflation decelerated to 1.7% in December after experiencing deflation of 1.9% in November.

Food reported annual inflation of 0.1% in December after deflation of 0.2% in November. Non-food deflation decelerated to 2.8% from 2.9% in November.

“Prices in Britain’s shops have continued to tumble, this month by -1.7%. This is the 20th consecutive month that customers have been able to go to the shops, fill their baskets and pay less for their goods than the year before, said BRC director-general Helen Dickinson.

“This is an incredible run of good fortune for consumers and in the medium term at least looks set to continue. A number of key commodities in the retail supply chain (in particular, oil) have fallen dramatically recently and the impact of these falls will continue to make its way through to shop prices for some time to come.”

Dickinson emphasised that the run of deflation isn’t all bad news for retailers. The Producers Price Index, which tracks the cost of raw materials to producers, is deflationary, so retailers have seen significant decreases in their own input costs. 

“However, fierce competition – the hallmark of the UK retail industry – has seen these savings passed on directly to consumers. It’s a win-win scenario that many are predicting will continue long into 2015,” said Dickinson.