Recognizing conservative consumer spending habits, many U.K. retailers are cutting prices to keep sales up, a new report from the British Retail Consortium found.

Price inflation slowed to the lowest recorded figure in the past two years in February, particularly among specialty clothing and electrical-goods stores. Overall, prices were up 1.2 percent year-over-year – down 1.4 percent from January and representing the smallest increase since March 2010.

By keeping prices low, U.K. retailers hope to boost demand and lure shoppers out of their homes, Bloomberg Businessweek adds. Many feel the combination of the sluggish economic recovery and rising unemployment are driving down consumer sentiment.

"Promotional activity has been sustained over the last three months as consumer confidence remains fragile," Mike Watkins, senior manager of retail services at Nielsen, told the news source. "Retailers are having to work hard to encourage customers."

In the United States, consumer sentiment has similarly declined. After three months of gains, new research from Consumer Reports found it slid 3 percent in March.

This entry was posted by Retail Pro on Wednesday, March 7th, 2012 at 10:25 am .