Shop prices decreased at their slowest rate in four years during October, despite food price inflation.

According to the BRC-Nielsen Shop Price Index, overall retail prices edged down 0.1% compared to the same month last year.

Deflation was driven by non-food products, which slipped 1.5% year on year and 0.1% compared to September.

Within the non-food category, prices of electronics edged into inflationary territory for the first time since the BRC-Nielsen Shop Price Index launched back in 2006.

Food prices climb

In contrast, food prices climbed 2.2% compared to October last year and were up 0.3% on September.

BRC chief executive Helen Dickinson said the figures illustrated “the enormous challenges” facing retailers in the current macroeconomic climate.

“While retailers are doing their best to provide value to keep prices low for consumers who are feeling the pinch of falling real wages, in an industry where margins are already low, the capacity to absorb further cost increases is wearing thin,” Dickinson warned.

“That’s a particular concern as retailers face paying an additional £270m in business rates next year.

“We urge the Chancellor to take the opportunity in his budget this month to freeze rates in order to encourage investment, to safeguard shops in economically vulnerable communities and to enable retailers to keep prices low for the UK’s households.”

Promotional activity

Nielsen’s head of retailer and business insight Mike Watkins added: “Disposable income is coming under pressure, however consumers are benefiting from the continuation of promotional activity, the use of vouchers and price cutting, in particular by supermarkets.

“This is going some way towards making up any shortfalls in spending power as cost-price inflation begins to impact prices.”