The prices charged for goods in shops fell at a slower rate in July, according to the British Retail Consortium (BRC).
The BRC's latest report shows that shop prices fell by 1.6% in July, compared with a 2% fall in June. It was also above the 12-month average deflation of 1.8%.
The deflation of non-food products slowed down from the 12 month average of 2.8% to 2.2%. But food prices fell by 0.8% for the second month in a row, the BRC said.
Helen Dickinson OBE, chief executive at the British Retail Consortium, said: “The long stretch of deflation continued in July with shop prices falling once again. This is testament to the strength of competition between retailers, which is as fierce as it has ever been. In food retailing, the battle for our custom has seen yet more deflation at near-record levels. Shoppers will have found fresh food prices 1.2% down on the same period last year and ambient food was cheaper for the first time since April 2015.
“While we may have become accustomed to prices falling, it’s worth noting that this month’s figures have seen the rate of deflation decelerate. Total price falls have slowed to -1.6% from June’s -2.0%. It’s too early to say if this is the beginning of the end of sustained price deflation or whether pressures in the wider economy could merely mark the end of the beginning.”
Mike Watkins, head of retailer and business insight at Nielsen, which co-conducted the research, said: "With unpredictable weather and a change to consumer sentiment underway, we have seen retailers cut prices or increase promotional activity in the last few weeks to help top line sales growth, so it is of no surprise that shop price deflation is lower in July than in any other month this year. Once again it is clear there is currently no inflationary pressure coming from retail and discounting looks set to be a catalyst to stimulate demand in the coming months.”