Shop prices drop throughout 2014 as deflation endures

Overall shop prices continued to drop throughout every month of 2014, according to the British Retail Consortium (BRC). The group predicts that shop prices will continue to deflate in 2015, driven by slipping oil prices.

The most recent data from the BRC indicated that shop prices fell once more last month, making it the twentieth consecutive month of deflation, although decelerating reach 1.7 percent during December, up from a deflation of 1.9 percent in November, 2014. Clothing and footwear prices dropped by 9.7 percent during the final month of 2014, with the average decline for the year hitting 10.9 percent for the sector, according to the British Retail Consortium-Nielsen Shop Price Index.

“Prices in Britain’s shops have continued to tumble, this month by -1.7 percent. This is the twentieth consecutive month that customers have been able to go to the shops, fill their baskets and pay less for their goods than the year before," commented BRC Director General, Helen Dickinson.

"This is an incredible run of good fortune for consumers and in the medium term at least looks set to continue. A number of key commodities in the retail supply chain (in particular, oil) have fallen dramatically recently and the impact of these falls will continue to make its way through to shop prices for some time to come."

“This significant run of deflation isn't all bad news for retailers. The Producers Price Index (which tracks the cost of raw materials to producers) is deflationary so retail business have seen significant decreases in their own input costs. However, fierce competition – the hallmark of the UK retail industry – has seen these savings passed on directly to consumers. It’s a win-win scenario that many are predicting will continue long into 2015.”