Belfast Telegraph

Discounting by struggling shops saw December prices drop 0.4%

Affordability: Aodhan Connolly
Affordability: Aodhan Connolly

By Josie Clarke

Shop prices continued to fall in December as struggling retailers were forced to respond to weak consumer demand and intense competition in the all-important run-up to Christmas.

Discounting ahead of Christmas led to a 0.4% drop in prices compared with December last year and a 0.5% decrease in November.

Food inflation was relatively modest at 1.4% as pressures from the global market trickled down to the consumer.

However, non-food retailers bore the brunt of weak sales as they competed for discretionary spending by pushing discounts in a last attempt to entice Christmas shoppers, sending prices down by 1.5% on last year.

Aodhan Connolly, director of the Northern Ireland Retail Consortium, explained the fall in shop prices was good news for consumers.

"Sales started earlier this year and were wider to drive consumer demand and make Christmas more affordable by spreading the cost," he said.

However, he warned that prices may not remain at their present low levels.

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"This cost drop is unlikely to continue if we have a Brexit that brings barriers, complexity and cost between Great Britain and Northern Ireland that there have never been before," he said.

"We will be working hard to make sure that the UK Government and EU understand that we need derogation and mitigation to protect the NI consumer from cost rises they can't afford."

British Retail Consortium chief executive Helen Dickinson said inflationary pressures, weak consumer demand and intense competition had all combined to stave off price increases.

"2019 has been a particularly challenging year, with historically weak sales growth," she said.

"While we expect future upward pressures on shop prices from movements in global food prices, these are likely to be relatively modest.

"The highest risk to prices remains the outcome of Brexit negotiations.

"With a new year comes a new Government and the opportunity to reduce cost pressures on the retail industry. It is key that the future relationship between the UK and EU secures tariff-free and low-friction trade in order to ensure a fair deal for consumers.

"Any future deal must maintain choice and availability by keeping costs down."

Mike Watkins, head of retailer and business insight at Nielsen, said: "The competition for the discretionary spend of shoppers intensified in December and discounts were deeper and began earlier, as retailers had to work even harder to keep customers shopping due to weak consumer demand."

Belfast Telegraph