BRC British Retail Consortium : The retail industry response to the new consumer price inflation figures

Following a six-year high of 3.1 per cent in November, the Office for National Statistics (ONS) has revealed that inflation dropped to three per cent last month.

Commenting, Rachel Lund, Head of Retail Insight and Analytics at the British Retail Consortium said:

'Consumer Price Inflation moved down just slightly to 3.0% in December, from 3.1% in November, as pre-Christmas discounting by retailers and a more modest increase in airfares than last year was offset by an increase in tobacco and petrol prices.

'We are likely to continue to see inflation falling back this year as, eighteen months on from the referendum, currency impacts have mostly fed through and are now falling out of the yearly calculations. However, the recent upswing in oil prices means we're likely to find the easing in inflation comes slower than previously anticipated. That's not great news for consumers, who are still seeing prices rise faster that their incomes.

'The squeeze on discretionary budgets and the pain for households will continue. As the government embarks on negotiating new trade arrangements, it must recognise that consumer spending, the biggest component of the economy, is under severe pressure, and do all it can to ensure that the grip on spending power is not further tightened through new tariffs on everyday goods.'