By Marcus Leach

Overall shop price inflation fell to 1.7% in December from 2.0% in November. Food inflation rose to 4.2% in December from 4.0% in November. Non-food inflation fell to 0.3% in December from 0.8% in November.

"This is a good bit of New Year news for customers. Even before the impact of last January's VAT rise comes out of the year-on-year comparisons, shop price inflation has reached a 16 month low of 1.7 per cent," Stephen Robertson, British Retail Consortium Director General, said.

"This is being driven by price cuts in electricals, clothing and footwear where many items are now cheaper than they were at this time last year. Non-food inflation of 0.3 per cent is a two year low.

"The Government's official measure of inflation's running at nearly five per cent as businesses and householders battle with soaring utility and fuel bills. In this climate, retailers deserve credit for keeping costs down. Stiff competition throughout the sector resulted in a blizzard of promotions and discounts ahead of Christmas which will have been a particular help to families facing falls in their disposable incomes.

"Falling commodity prices take time to work through to tinned and packet foods but shoppers will see that happen in the coming months. Consumers are likely to rein in spending in the wake of Christmas and price will remain the main battleground between retailers, meaning customers with money to spend will benefit."

Join us on
Follow @freshbusiness