RETAILERS saw the biggest annual decline in prices in eight years in June, as a supermarket price war alongside cheaper furniture, electricals and clothes took effect.
The British Retail Consortium reported that prices in shops fell 1.8 per cent last month compared with a year earlier.
The decline was the biggest annual drop since the survey began in December 2006.
Food prices were 0.6 per cent higher – the smallest gain on record – while non-food prices were 3.4 per cent lower, another record fall.
BRC director-general Helen Dickinson said: “Fierce competition among grocers has driven food price inflation to record low levels and with some grocers having announced plans to keep prices down, consumers stand to benefit for a while to come.”
The report added that apart from volatile coffee prices, due to a drought in Brazil, the global outlook for rising commodity prices “remains modest”.
Prices also fell sharply for non-food items, with the overall rate accelerating to 3.4 per cent last month from 2.8 per cent.
Non-food prices fell fastest among clothing retailers with deflation hitting 13.7 per cent from 11.4 per cent, while electrical goods fell four per cent.
Nielsen’s head of retail and business insight Mike Watkins said: “Food inflation is still low. Many supermarkets are price cutting and non-food prices remain deflationary, so the high street continues to generate lit tle inflationary pressure.”
Supermarkets have embarked on a widespread price cuts in the face of competition from German discounters Aldi and Lidl, with mixed results. Last month, Tesco reported its largest drop in quarterly sales in 40 years despite price cuts.