By Marcus Leach

Figures released by the British Retail Consortium (BRC) show that overall shop price inflation slowed to 2.8% in July from 2.9% in June - which was the highest it had been in three years.

Food inflation slowed to 5.2% in July from 5.7% in June. Non-food inflation was unchanged in July at 1.3%.

"The fall in overall shop price inflation came almost entirely from food," Stephen Robertson, British Retail Consortium Director General, said.

"Good crops of seasonal fresh fruit and vegetables boosting supplies and cheaper animal feed easing the pressure on meat prices were the prime reasons food inflation fell, offering some respite to squeezed household budgets.

"Customers have adapted their shopping habits to higher levels of inflation over the last few months. People are increasingly taking advantage of promotions to help mitigate against the full impact of inflation, so the effect of food inflation faced by consumers will be less than 5.2%. Thirty-nine per cent of all the groceries being bought in supermarkets are now on offer.

"High world commodity costs and import inflation resulting from rising prices in China are still the key factors behind shop price rises. Non-food inflation was virtually unchanged from June but is still remarkably low, especially since these figures include the effect of the VAT rise."

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