Good news for shoppers: prices fall at fastest rate in seven years
UK shop prices have fallen for the eighth month in a row and at the fastest rate in seven years in a "double whammy of good news for cash-conscious customers".
In December, non-food prices fell by 2.3% year-on-year in December, compared with to a slump of 2% the previous month, according to analysis compiled by Nielsen for the British Retail Consortium.
Helen Dickinson, BRC director general, said: "Non-food prices fell further in December, reflecting the widespread promotional activity as retailers competed for all-important Christmas custom.
"Many categories remained deflationary, while prices fell for books, entertainment and home improvement products to attract shoppers preparing for the festive break."
She added: "It's also worth noting that 'Cyber Monday' fell in the period covered by the index, so discounting was particularly commonplace, with many retailers offering to match or beat offers found elsewhere."
While the price of food continued to rise in December, the rate of increase slowed from 2.3% in November to 1.7% in December.
Dickinson said: "Food inflation fell to its lowest level since June 2010, driven mainly by significant easing of prices for fresh and ambient goods [food that can be stored at room temperature]."
Are price drops here to stay?
Mike Watkins, head of retailer and business insight at Nielsen, said: "With food inflation slowing in December, this will have brought a festive cheer to shoppers filling their trolleys with food and drink at supermarkets, especially as Christmas fell later this year.
"With the continuation of price cuts and promotions across all of retailing and with many shoppers holding back on shopping to the last week, there will have been bargains and some great savings for the savvy Christmas shopper."
And the easing in the increasing cost of food could be here to stay. Dickinson added: "With few signs of volatility in the supply chain at present, I would expect retailers to continue helping to keep the cost of living down, with prices settling at relatively low levels in the coming months."
Asda is leading the supermarket battle to keep prices down in the New Year by cutting the price of a range of everyday food items to just 50p. Cans of Heinz soup, tinned tomatoes and Oreo cookies are included in the discounts.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
A property chain is a line of buyers and sellers (the “links”) who are all simultaneously involved in linked property transactions. When one transaction falls through – for instance, someone can’t get a mortgage or simply withdraws their property from sale, the entire chain breaks and all the transactions are held up or even fail entirely.