Relief for shoppers as inflation falls

Figures from the British Retail Consortium show shop price inflation fell to 1.7 per cent in December from two per cent in November.

While food inflation continued to climb, hitting 4.2 per cent in December, non-food inflation fell to 0.3 per cent from 0.8 per cent a month earlier – a two-year low.

The BRC said shoppers have been lured in by a “blizzard of promotions and discounts”.

“Consumers are likely to rein in spending in the wake of Christmas and price will remain the main battleground between retailers, meaning customers with money to spend will benefit,” said BRC director general Stephen Robertson. He said price cuts in electricals, clothing and footwear are driving down inflation, with many items cheaper than a year ago.

Once last year’s VAT increase has worked through, non-food should turn deflationary, the BRC said.

Lower shop price inflation will reinforce the Bank of England’s belief that inflation is headed steeply south this year.