Food inflation has fallen to its lowest level for more than a year and a half, according to the British Retail Consortium.

Lowering commodity costs and sharp competition between retailers has led to the change, which saw prices rise by just 3.8% in July, compared to 5.6% in June.

Fresh food showed the largest decline in the rate of inflation, with a fall from 11.9% in August 2008 to just 3.1% in July, as overall shop price inflation stood at 0.5% - the lowest since December 2008.

Stephen Robertson, director general of the British Retail Consortium which released the price index, said food could be in line for further falls, as more falls in commodity prices filter through.

Sugar prices, meanwhile, are expected to hit a 28-year high after poor weather in the main sugar-producing regions of India and Brazil.

Products outside food are also showing a slowdown in their declines, as pick-ups in the property market boosts demand in products like furniture and flooring.