Shop prices are down on a year ago, for the second consecutive month, according to the British Retail Consortium (BRC).
The BRC-Nielsen Shop Price Index showed prices fell by 0.1% in September 2009.
Food inflation increased to 2.5%, up from 2.3% in August, while annual non-food deflation was 1.4% in September, the same as in August.
Stephen Robertson, BRC director general, said: “Overall shop prices are down on a year ago for the second month in a row. Prices for non-food goods have been deflationary for ten consecutive months now, with clothing, electricals and furniture showing the biggest falls as retailers discount to generate sales.
“Fresh food inflation fell to its lowest level since the index began in 2005 – a dramatic contrast with a year ago. Shop prices for some manufactured foods increased more quickly than last month as big increases in the world prices of sugar and cocoa pushed up costs, but this wasn’t enough to affect overall shop price inflation.”
Mike Watkins, senior manager for retailer services at Nielsen, said: “Non-food prices remain lower than a year ago but many shoppers are still reluctant to spend on higher ticket items despite VAT reductions.
“The marginal increase in the inflation at food stores is indicative of food price inflation returning to the more normal, long-term range of between 2% and 3%.”
The increase in food prices can be attributed to a rise in ambient (tinned and packet) food inflation, which accelerated to 4.9% from 3.8% in August.
But fresh food inflation fell to an all-time low of 0.8% in September, the seventh successive monthly fall. In the last 13 months, fresh food inflation has fallen by 11.1 percentage points.
