Inflation drop benefits consumers

December 2011 saw a drop in shop price inflation to 1.7%, a 16-month low, according to the latest conumer reseach reports. With the price cuts affecting footwear, cloting and electricals being the most hit. This will help shoppers buy more goods and not feel the pinch as much after last year’s VAT rise. As shoppers have been so unwilling to spend in the past few years, the inflation rate drop will surely help consumers start to purchase more items. Recognition has to go to the retail sector, where prices have remained at affordable prices despite rising costs and the difficult inflation rate.

As the fuel and utility bills have been soaring in recent times, and the Government’s official figure of 5% for inflation, something had to change to entice more consumer spending. Retailers have done a sterling job in keeping prices low, despite fierce competition, discounts, promotions and online savings that are available. Inflation on food rose by 4.2% last month, up 0.2% from November, while there was a 0.5% drop to 0.3% on non-food inflation which is a marked change for both retailers, consumers and suppliers.

As commodity prices take a while to make a difference on the shelves, consumers will most likely see the changes over the next few months, which will time nicely as shoppers will have recovered financially from the Christmas spending that saw many retailers have their best Christmas sales for years. Packet and tinned food prices have taken quite a hit and this will both help consumers and affect the overall spending power that people have in the UK. With extra money in their pocket, shoppers are more likely to continue the upward trend of spending instead of penny-pinching, which ultimately will help bring the country out of the recession once and for all.