Shop prices fell by 1.3 per cent in July, compared to a decrease of 1.6 per cent in June, according to the latest British Retail Consortium (BRC) and Nielsen figures.

Non-food prices fell by 2.9 per cent in July, compared to a decline of 3.4 per cent in June, while food price inflation was steady at 1.5 per cent in July - the third consecutive month when prices increased at the same rate.

Fresh food inflation accelerated to 0.9 per cent in July, up from 0.5 per cent in June, while ambient food inflation slowed to 2.3 per cent in July, down from 2.9 per cent in June.

BRC chief executive Helen Dickinson explained that despite firms facing increasing costs, shop prices continued to fall in July, albeit at a reduced pace compared to the previous month.

"This was driven by a slower decline in non-food prices: sectors which saw a release of pent-up demand, such as electricals and furniture, saw fewer promotions," she pointed out. "On the other hand, sectors where consumer spending remains weak are under significant pressure - for instance prices for health and beauty products barely moved.”

Mike Watkins, head of retailer insight at Nielsen, added: “Now that all of retail has re-opened for business, keeping prices stable will be important as it’s going to be difficult for retailers to second guess the strength of consumer spend with social distancing measures continuing, and consumer confidence still low.”

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