By Daniel Hunter

There was further good news for the retail sector today (Wednesday), following yesterday's three year high for sales growth, as figures released by the British Retail Consortium revealed a five month low for food price inflation.

Overall shop price inflation rose to 1.1% in February from 0.6% in January. Food inflation fell to 3.5% in February from 4.0% in January. Non-food prices fell 0.4% in February compared with a 1.4% fall in January.

"Food inflation has fallen to a five month low, a sign that past falls in commodities such as wheat and corn are continuing to filter through. There are still pressures in the pipeline, especially from recent rises in the price of animal feed, but barring any major shocks I would expect food inflation to stay fairly steady in the medium term," Helen Dickinson, British Retail Consortium Director General, said.

"Non-food is less deflationary than the previous month. This is to be expected after the deep discounting of the post-Christmas sales. But prices in many categories are still down year-on-year, with furniture and floorcoverings showing price falls for the first time in seven months.

"The overall inflation figure is up, another sign that discounting is less extensive than it was in January. But it's still well below the Consumer Price Index of 2.7 per cent - a reflection that, with consumer confidence still weak, retailers continue to do all they can to offer the best possible value. And our February sales figures, which showed the strongest sales growth for three years, suggest that customers are responding well to this."

Mike Watkins, Head of Retailer and Business Insight, Nielsen said: "Food inflation continues to be volatile due to global factors such as worldwide demand, harvests and commodity prices and this month we have seen ambient food prices rising less slowly in the stores.

"This will help shoppers in the short term even if the outlook for inflation remains uncertain. We can also expect shoppers to continue to look for more savings in the weeks leading up to Easter and for retailers to respond with a continuation of heavy promotional activity."

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