Shop prices rose at their slowest pace in two-and-a-half years in June, according to the British Retail Consortium (BRC).
Overall shop price inflation slowed to 1.1% from 1.5% in May as retailers were aided in their efforts to get cagey consumer through the door by falling commodity prices.
Food price inflation slowed to 3.5% in June from 4.3% in May, while non-food prices continues to fall, registering a drop of 0.3% compared to 0.1% in May.
It was the fifth month in a row that non-food items dropped.
Stephen Robertson, the BRC’s Director General, said this reflected crude oil prices down a quarter on three months ago with food commodities, such as coffee and sugar, falling sharply over the same period.
‘In a highly competitive market, retailers are rushing to reflect those drops in good deals for customers,’ he said.
The BRC’s figures will encourage the Bank of England to boost its £325bn asset purchase programme when members of the Monetary Policy Committee meet on Thursday.
Many analysts believe the Bank will increase the quantitative easing scheme by £50bn as policy makers’ inflation fears ease.
‘At the same time, weak consumer demand continues to drive deep and heavily targeted discounting, particularly among non-food goods.’
Mike Watkins, Senior Manager of Retailer Services at measurement firm Nielsen, said the figures would be welcome news for the many households needing to make savings on household bills and bigger ticket items.
‘However, it’s double-edged for food retailers where demand remains weak,’ he warned.
‘The unpredictable summer weather has dampened recent growth but, with the summer of events underway, the fall in inflation should give a boost to shopper spend.’