Prices slashed at fastest rate for seven years over Christmas

The price of consumer goods dipped to a seven year low during December as retailers resorted to aggressive discounting to boost Christmas sales, according to data from the British Retail Consortium.

Low prices expected to continue for 'coming months'

Shoppers can look forward to low prices for at least the first few months of 2014, experts have said.

Figures from the British Retail Consortium suggested a stable global economy would keep prices down.

With few signs of volatility in the supply chain at present, I would expect retailers to continue helping to keep the cost of living down, with prices settling at relatively low levels in the coming months.

– Helen Dickinson, British Retail Consortium

'Deep and widespread discounts' cut into shops' profits

The "deep and widespread" discounting on offer throughout December has taken a sizeable chunk out of retailers' profits, experts said.

Read more: John Lewis & House of Fraser enjoy strong Christmases

While inflationary pressure in the supply chain remains benign, deep and widespread discounts have come at the expenses of profit margins.

– British Retail Consortium report

High street giant Debenhams last week issued a profits warning after disappointing festive sales forced it to slash price tags,.

Marks & Spencer also rolled out its "Mega Day" on the Saturday before Christmas.

Read more: Debenhams finance chief quits after profit warning

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Shop prices dipped by 0.8% over Christmas

Shoppers benefitted from the fastest drop in prices for seven years during December as high street retailers pushed them down by 0.8%, according to the latest figures.

Read more: Christmas failed to deliver as high street sales drop

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Shoppers benefitted from a drop in food and non-food prices in December. Credit: PA

The British Retail Consortium (BRC) hailed a "double whammy of good news for cash-conscious customers" thanks to a combination of aggressive discounting and a quick slide in prices.

Inflation fell to 1.7% - its lowest for three years - while widespread discounting saw non-food prices fall by 2.3%, according to the BRC and Nielson.

Mike Watkins, head of retail and business insight at Nielsen, said: "This will have brought a festive cheer to shoppers filling their trolleys with food and drink at supermarkets, especially as Christmas fell later this year.

"With the continuation of price cuts and promotions across all of retailing, and with many shoppers holding back on shopping to the last week, there will have been bargains and some great savings for the savvy Christmas shopper."

Read more: Poll: January sales 'not worthwile' for shoppers