High street retailers predict carnage at Christmas

HIGH STREET shops plan to slash their prices over Christmas - normally the busiest period of the year - for the first time in recent history.

The Confederation of British Industry said yesterday that the number of retailers expecting prices to be lower this month than last Christmas outweighed those saying they would be higher - the first time this has happened in the 16 years the CBI has run the survey. It also found prices were flat last month for the first time.

The survey adds to growing evidence that retailers are struggling to cope with intense competition on the high street that is driving down prices. Separate figures showed house prices fell last month while manufacturing industry grew for the sixth month in a row, indicating that the imbalance in the economy is starting to correct.

The CBI said retailers expected sales to rise "significantly" this month following a strong recovery in volumes in November. Alastair Eperon, chairman of the distributive trades panel, said the pick-up in November reflected the impact of competitive pricing strategies. "Fierce competitive pressures are set to hold down prices," he said, adding that interest rates should stay on hold next week.

The main casualties were footwear and leather retailers, which suffered a second month of sharp decline in sales volumes and prices. Clothing shops and booksellers also reported falls.

Sectors associated with the housing market, such as furniture, carpets and household goods reported the strongest increases in sales volumes. However, more than two-thirds of retailers of household goods said prices fell last November and would fall again this month.

The survey supports anecdotal evidence that big name retailers such as Marks & Spencer, House of Fraser and C&A are cutting up to a third of prices over the festive period. "If there's one thing we've learnt in this retail recovery, it's that bargain hunting is in fashion," said Adam Law of Barclays Capital.

Barry Naisbitt of Abbey National added: "We are in a rather different world of consumer behaviour. They are rather reluctant to take higher prices and continue shopping around."

In sharp contrast, a shortage of raw materials and the surging oil price sent manufacturers' input prices soaring to their highest level for four years. The cost of raw materials rose for the fourth month in a row hitting 57.1 last month compared with 56.3 in October on an index where anything over 50 indicates a rise. The Chartered Institute of Purchasing and Supply, which compiled the data, said: "Widespread shortages, strong global demand and high oil prices ... have led to a further acceleration in the rate of input price inflation."

Its report also showed the sector expanded to its highest level for two years, but at a slower rate than forecast. Its index rose to 54.2 compared with 54.1 in October and forecasts of 55.0. "Strong domestic demand for UK manufactured goods, resulting in part from the run-up to the millennium, was supplemented by a modest increase in the demand for exports," it said.

Meanwhile Halifax, Britain's largest mortgage lender, said prices fell 0.5 per cent last month. But it said the housing market was still enjoying double-digit inflation - 10.7 per cent compared with 10.8 in October.

"The favourable affordability situation, together with a further improvement in economic conditions, should support a relatively strong housing market over the next 12 months," it said. "Higher interest rates, however, will constrain housing demand. Accordingly annual house price growth is forecast to slow to 8 per cent by the end of 2000."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Supporting role: at the Supreme Court, Rhodes was accompanied by a famous friend, the actor Benedict Cumberbatch
booksPianist James Rhodes on the extraordinary legal battle to stop the injunction of his memoirs
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
filmDheepan, film review
Sport
Steven Gerrard scores for Liverpool
sport
Arts and Entertainment
Bob Dylan
art
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?