Shop price inflation slowed to 1.5% in June after slowing to 1.8% in May, according to the BRC-Nielsen Shop Price Index.
Food inflation slowed from 2.2% in May to 1.7% in June with non-food inflation down to 1.4% from 1.6% in May.
The lower levels of inflation signal heavy promotional activity among many areas of retail particularly around the World Cup.
BRC director general Stephen Robertson said that he believed the era of shop price “volatility” was “over for now” adding “low and stable inflation appears likely for the rest of the year”.
“The fluctuations in commodity costs and exchange rates over the last 18 months have now fed through. Barring any major shocks, we’re not expecting sharp movements in price,” he said.
“In the face of weak demand, retailers will continue to use widespread discounts and promotions. But, given their thin margins, there will be little scope to absorb next year’s VAT increase. This will put significant pressure on inflation from January onwards.”