Retail prices drop for twentieth consecutive month in December

Shop prices fell for the twentieth month in a row in December, albeit at a slightly slower pace than the deflation recorded in November, according to data from the British Retail Consortium (BRC).

Deflation was 1.7% for the final calendar month of the year, in comparison to 1.9% in November.

Food prices edged up slightly by 0.1% but the data means that on a 12-month average basis, the Shop Price index has experienced deflation of 1.6%.

Mike Watkins, head of retail and business insight at Nielsen, said: "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."

However, BRC director general Helen Dickinson urged consumers to take advantage of tumbling retail prices.

She said: "This is an incredible run of good fortune for consumers and in the medium term at least looks set to continue.

"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."