Shopper the winner as prices fall

BRC ​d​irector ​g​eneral Helen Dickinson said: “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.”

The BRC said deflation isn’t all bad news for retailers as the Producers Price Index, which tracks the cost of raw materials to producers, is deflationary which means that retailers have seen significant decreases in their own costs.

However, fierce competition, the hallmark of the UK retail industry, has resulted in these savings being passed on directly to consumers.

“It’s a win-win scenario that many are predicting will continue long into 2015,” said Ms Dickinson.

​​Mike Watkins, ​h​ead of ​r​etailer and ​b​usiness ​i​nsight​ at​ Nielsen, said: “The high levels of discounting across most retail channels in 2014 will have given a boost to sales and the year ended with shop price inflation close to record lows in December, so it’s the consumer who has been the winner all round.

“With little external pressure to move prices upwards and an uncertain level of consumer demand, retailers will be cautious about price increases so we can expect a continuation of deflation for at least the first part of 2015.”

The BRC-Nielsen Shop Price Index (SPI) reported annual deflation of 1.7​ per cent last month,​ decelerating from 1.9​ per cent​ in November.

Food ​saw annual inflation of 0.1​ per cent​ after reporting deflation in November for the first time since the series began in December 2006​.

Downward pressure came from milk, cheese, eggs, vegetables and convenience food, all of which reported annual deflation in December.

Price rises were seen for oils, fats, meat, fruit and fish.

​N​on-food deflation slowed marginally to 2.8​ per cent​ from 2.9​ per cent​ in November​.​

Prices fell in Fu