Shop prices fell by 1.4% year on year during August on the back of intense competition and falling commodity prices.

Clothing retailers discounted heavily during the month resulting in prices falling on average by 5.4%, according to the BRC- Nielsen shop price index.

Furniture and flooring recorded deflation of 1.2%, while prices across books, stationery and home entertainment plunged 5.2%.

Food prices bucked the overall trend though as they rose 0.2% during August, following a 0.1% rise the previous month.

Competitive market

BRC director-general Helen Dickinson said: “Annual food prices rose for a second month but once again the rise was marginal and is likely to be a temporary fluctuation in a longer term downward trend driven by ongoing competition. August marked the 29th month of falling non-food prices.

“A relatively benign economic environment and a fiercely competitive market will see retailers continue to respond to their customers with prices and promotions to maintain market share.”

Nielsen head of retailer and business insight Mike Watkins added: “Consumer confidence continues to increase but many shoppers are still unable or unwilling to spend freely, so retailers are continuing to offer high levels of promotions and price cuts.”