Xmas Offers: 38% Of Goods On Sale Since Oct

On Wednesday, December 8th, 2010

Nearly two-fifths of goods on sale are already on discount in the run up to Christmas, pushing down retail inflation, according to new data.

January sales to before Christmas in recent years

A Nielsen Homescan survey showed that in the four weeks to the end of October, a record 38% of consumer goods were on promotion.

The British Retail Consortium (BRC) said this caused shop price inflation to dip in November to 2%.

However this compared to inflation of just 0.2% at the same time last year, confirming the rise in overall inflation over the year.

Food inflation also dropped for the first time in five months, largely due to competition between supermarkets and the calming of previously volatile commodity prices.

The broader measure of inflation, the Consumer Price Index, grew slightly in October to 3.2% according to the Office for National Statistics.

The index includes price changes on a wider range of items like fuel, utilities and services, and has remained well above the Bank of England’s 2% target for more than a year.

BRC director Stephen Robertson said: “A fall in food inflation to 4% shows the highly competitive grocery market is keeping costs down for customers in the run up to Christmas.

“There’s been no fundamental change in the upward pressure coming from higher costs for wheat and other commodities but stores are holding back the full force of these rises.

“With the official measure of inflation now running at more than 3% for eight consecutive months, a shop inflation figure of 2% is much lower.

“It’s soaring petrol and energy prices that are hitting households. Retailers don’t want to be adding to that burden.”

The good news may be short lived as the report suggested that retail inflation was likely to rise in 2011 because of the VAT hike and expected higher energy costs.

Shoppers have become accustomed to heavy discounting prior to Boxing Day since the financial crisis began in 2008.

Richard Dodd from the BRC told Sky News this was driven by customer reluctance to spend, particularly on big-ticket items like household white goods.

Although the upcoming VAT rise has prompted some shoppers to bring forward purchases, he said that the effect was “not big enough”.

“Retailers need to discount in order to tempt customers to buy,” he added.

Meanwhile, the industry received a stark warning recently from the Office of Fair Trading, telling them not to dupe customers with confusing offers.

Stephen Robertson
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