Updated: 29/06/2022 11:36:50
With much of 2022 gone, Black Friday is soon to be upon us. The biggest shopping day of the year brings promises of rock bottom prices, but data from Offeroftheday discovered that now may be the time to strike on your Christmas shopping lists. Increasing prices mean that Black Friday 2022 could be the most expensive yet.
It feels like the cost of everything is going up. Between increased petrol prices and the effects of Brexit and Covid-19, it can be difficult to see just where these changes line up. We often read about the varying changes in inflation (the change in prices for goods and services over time), but it's hard to know if price changes at the retailers themselves truly reflect inflation. While inflation is not exclusively responsible for price changes, looking at how our shopping costs have changed over time may shed some light on why many UK households are being forced to use extreme measures to stay afloat.
The Office for National Statistics (ONS) provides easy access to bulk data on a number of values, including consumer price inflation (CPI). It also sheds light on a number of factors contributing to increased inflation.1 These can include:
We've taken historical data from 8 of the most popular retailers on site including clothing, home and garden and electronic retailers. Analysing average price data from the last year, we saw that the average price over the last 12 months has increased by over 15%. We can compare this to a steady rise in inflation.
From Figure 1, the average price of products from retailers on Offeroftheday is increasing at a higher rate than UK inflation. While there is still a significant dip in pricing around the late November Black Friday period, the data suggests that it is more beneficial to buy items as early as possible to reduce the effects of constant price rising.
We can compare this data to the 2020-2021 trend.
From Figure 2, there is actually a slightly downwards trend in average prices across the same retailers. This could be a reflection on the general steady CPI rate over the same time period. From this graph, there is an obvious and abrupt price decrease around the November Black Friday period.
But why are average prices at your favourite retailers going up faster than inflation? It's important to remember that there are a number of factors that contribute to rises in inflation.
Figure 3: Contributions to the CPI 12-month inflation rate, UK, May 2020 to May 2022. Source: Office for National Statics
Housing and household services, along with transport have become stronger contributing factors over the last 2 years. This year has seen a record increase of 54% in household energy bills and overall running cost and energy bills has seen a knock on effect on retailers who are now facing substantial increased costs running factories and stores.2
Another factor we can look at is the recent increase in petrol pricing and logistics. Facing shortages of transport options and increased fuel, we would expect part of this increased cost to be passed on to the consumer. The average pump price in June 2021 was 130.73p. Compare this to June 2022 where the average cost is 190.93p, we can see a jump of 46% in just the last 12 months.3
Black Friday has become the biggest and brightest shopping day of the year. In 2021, Offeroftheday found the total mean average discount of all products from retailers was 5.6% compared to the previous month. Given the current trend in pricing shown in Figure 1, by Black Friday November 2022 this discount would need to be significantly higher to offset the new base prices.
So does this mean you should start your shopping now? Well, yes and no. While average pricing is constantly on the rise, Black Friday has a focus on high ticket items. It is one of the only days of the year where the Apple store has discounts and many retailers provide massive discounts of over 50% on electronics and white goods. Where another large saving could be made is in bulk buying. When it comes to items such as water filter replacements, stationary, ink cartridges and other products, it may be worth investing in a couple of refills. These items don't often have discounts, so looking at the pricing trends, the cost of these items is likely to steadily increase.
Looking back on the previous year in Figure 2, it's easy to see the benefits of Black Friday, with prices falling far below any other time of the year. Black Friday 2021 merely managed to offset the constant price rises, setting them back by a few months before continuing to rise into 2022. Many sources reported a decrease in total spend in Black Friday 2021 compared to the previous 2 years. While this can often be attributed to lockdown measures and furlow, our data shows that Black Friday discounts simply were not as impressive compared to previous periods.
Black Friday 2022 falls on Friday the 25th of November. However, If cost increases continue on their current trajectory, prices could rise as much as 7% between now and November. This means that one type of product currently averaging at Â£500 today could cost upwards of Â£535 in 5 months time.
As mentioned before, there are a number of specific item types that will still see large discounts in Black Friday 2022. But with the current costs of utilities, petrol and training currently still in turmoil, we can expect the average prices from retailers to continue to rise. If you're on the fence about a big purchase, it may be worth purchasing soon, rather than hoping for large discounts later in the year. However, once we past August/September time, it might be worth holding out for a month or two to reap the benefits of Black Friday discounts. Black Friday is still the largest shopping day of the year for retailers, so expect to see a number of large discounts and popular deals.