Amid the troubling backdrop of COVID-19, UK shoppers enjoyed a decrease in prices in a number of categories over Christmas.
According to the British Retail Consortium (BRC), shop prices fell in December by 1.8%, the same rate of decline in November and below the 12- and 6-month average decreases.
Non-food prices also decreased by 3.2% in December, compared to a decline of 3.7% in November and a 12-month average price decline of 3%. Fresh food prices slid 0.9% in December, compared to a rise of 0.5% in November.
“It was welcome news for shoppers in the run up to Christmas as prices fell in December. As in November, non-food prices dropped, and retail firms who have been hardest hit by the pandemic this year, such as fashion outlets, are continuing to offer discounts,” said Helen Dickinson, chief executive at the BRC.
“Notably, food inflation eased to its lowest since March 2018, with a significant fall in fresh food prices. This was largely driven by last year’s decrease in global food prices filtering through onto British shelves, as well as the fierce competition between supermarkets to offer customers the best value, quality goods in the face of testing circumstances.”
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In fact, recent data from Kantar shows all UK supermarkets saw sales growth over Christmas, with Iceland and Ocado (OCDO.L) the best performers. Ocado grew sales by 36% to just over half a billion pounds, while Iceland’s sales jumped by 20%.
Market watchers have been fearful that the UK’s exit from the European Union (EU) would lead to a hike in the prices of foods and other products imported into the country.
While that remains to be seen, there are “still huge cost pressures bearing down on them as the consequences of last year’s forced closures take effect and social restrictions continue to impact the New Year,” said Dickinson.
The news comes as further lockdowns are announced in the UK, with England joining Scotland as COVID-19 cases continue rising. The UK reported a record 58,784 cases on Monday, in addition to a further 407 deaths within 28 days of a positive test.
To transcend the financial chaos the restrictions will place on families and their willingness to spend money, the BRC is calling on the government to provide additional targeted financial support, including extending the business rates relief beyond April 2021.
“Otherwise, many more businesses will become unviable and many thousands of jobs could be at risk,” said Dickinson.
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