Northern Ireland retailers are gearing up for a buoyant Christmas as the pound looks set to hit parity with the euro.

Some financial experts are predicting that the two currencies will be equal in value by December after inflation last month fell to 1.1% — its lowest level in five years.

Sterling has been under pressure in recent days, slumping 0.5% against the euro to a six-month low of 1.0628 euros. It also dropped to a five-month low against the dollar of $1.571, though pulled back against both currencies later.

This is terrific news for bargain-hunting shoppers from the south, but the outlook is bleak for their northern neighbours across the border.

It is now more expensive than ever to travel down south, where even a cappuccino costs 29% more in Costa Coffee.

Holidaying further afield in Europe will also present an added strain on Northern Irish wallets, with many people opting for ‘staycations’ instead.

Currency specialist Niall Haughey from Blue FX Markets warned there could be even tougher times ahead. “It is clear that Irish shoppers will benefit from the falling pound,” he said.

“However, for your average Northern Irish shopper that likes an adventurous trip to Dublin or further afield to say, Paris, they are looking at an increasingly expensive shopping trip as the Euro gets more expensive for them.

“If parity is reached, which it could easily be in the run up to Christmas, this will be even more so.”

Leading Northern Ireland economist John Simpson said we could see both currencies edging towards a common value.

“If present trends continue, then we might well hit parity for a period,” he said.

“However, this wouldn’t be a stable, long-term position,” he said.

Meanwhile, Connor Doherty, who works in a currency exchange company based in Belfast’s Castle Court Shopping Centre, said he doesn’t expect euro pound parity before Christmas. “A lot of people are saying there will be parity, but I personally don’t think it will happen,” he said.

“The euro has broken through the 90p barrier, but it hasn’t really made any in-roads since then.”

Fuel shopping in the Republic has also lost some of its lustre in recent times.

In September, AA Ireland reported average petrol prices of 118c (or 110.5p) a litre in the south, making it much less economical for motorists from the north to cross the border to fill up when it costs around 106.9p on average here.

Average diesel prices are now sitting at 106.7c (or 99.9p) in the Republic, compared with 107.6p at our forecourts.

That equates to a 7.7p north/south differential — which represents a drop of over 10p per litre from the 18p difference which was reported by this newspaper in February.