Overall shop prices reported deflation of 1.4% in July, lower than the 1.3% fall in June, according to the July BRC-Nielsen Shop Price Index.
Food reported annual inflation of 0.1%, up from the 0.4% decline in June 2015. This is the first inflationary rise in seven months.
On a 12-month average basis, the Shop Price Index reported deflation of 1.7%.
Non-food deflation accelerated to 2.3% from 1.9% in June.
BRC director general, Helen Dickinson, said: “Shop prices fell by 1.4 % this month marking the 27th consecutive month of prices drops which is good news for consumers.
“In the three months to July, food prices fell by 0.4 % as the impact of past falls in oil but lower commodity prices and weaker demand in emerging markets helped support a continued deflationary environment. Annual food prices did rise very marginally this month, by just 0.1% year-on-year, this is a short-term blip in the longer term downward trend, reflecting the on-going heightened levels of competition and it is not very significant.
“July marked the 28th month of falling non-food prices. Clothing retailers were keen to shift their summer stock with widespread discounts clearly part of their strategy. Prices throughout this category fell on average by 4.9%. Furniture and Flooring saw a sharp acceleration in deflation to 2.7% as retailers attempted to capitalise on stronger levels of demand in this category from renewed strength in the housing market.”
Mike Watkins, head of retailer and business insight, Nielsen, said: “Deflation in retailing has been a big influence on sales over the last 12 months, as has the unpredictable weather, price cuts and short term promotions. In food retailing, whilst ambient prices are becoming more stable, many fresh foods are again cheaper than this time last year and there have been some attractive sales and offers across non-food retailing in recent weeks. Shoppers are saving money which is helping consumer spend in the wider economy.”