By Daniel Hunter

Overall shop prices reported annual deflation for the sixth consecutive month in October, deepening to 0.5% from the 0.2% decline reported in September. Food inflation slowed to 2.7% in October from 2.9% in September. Non-food reported annual deflation of 2.4% in October from 2.0% in September.

Helen Dickinson, British Retail Consortium Director General, said: "After inching up slightly in September, inflation has again matched the record low we saw in July and August, marking the highest October deflation rate since our index began.

"Non-food prices fell further during the month, mainly driven by promotions on clothing and the ‘Super Thursday' effect of widespread offers on the new books launched in good time for Christmas. Value was also a mainstay across the electricals category, as retailers competed to cater for strong pre-Christmas demand for gadgets and games while also paving the way for new releases still to come.

"Food inflation edged down in October, thanks to a slight fall in the prices of ambient goods, and fresh produce remained stable. This should mean good deals for shoppers as they start stocking up on seasonal fare.

"With Christmas fast approaching, there are good signs that budgets will go a little bit further for many of us this year."

Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: "Despite the slightly more optimistic economic outlook, across the industry we are seeing that consumers are still reluctant, unwilling or, in some cases, unable to increase spend. So retailers are working hard to stimulate demand and it's of no surprise to see another slowing of shop price inflation, with further deflation in non-food. Based on current trends we also anticipate an increase in promotional spend by food retailers, which will offer cash-strapped consumers further savings ahead of December."

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