Annual shop prices deflated for the fifth month in a row in September, pulled down by non-food as retailers cut prices and launched promotions.

The British Retail Consortium (BRC)-Nielsen Shop Price Index revealed shop price deflation eased to 0.2% in September from 0.5% the month before.

In September year-on-year food inflation increased to 2.9% from 2.5% in August, while non-food deflated to 2% from 2.3% in August.

BRC director general Helen Dickinson said: “Deflation in September was driven by non-food items and, in fact, we’ve only seen one month since January 2012 which has been inflationary for non-food.

“Retailers have used deep discounts and promotions, particularly in audio and visual equipment and men’s and children’s clothing.  This is further evidence of the continuing pressure on margins across the sector.”

Non-food prices have been deflationary for six months and September’s deflation was deeper than the six-month average at 1.8%. But the monthly rate of inflation eased due to a slowdown in deflation across the clothing and footwear, furniture and electricals categories while the health and beauty category returned to inflation.

Meanwhile, food inflation increased for the second consecutive month driven by the ambient food category, which accelerated by 0.8 percentage points as prices across non-alcoholic drinks grew “sharply”.

But Nielsen head of retailer and business insight Mike Watkins said prices are predicted to stay low as retailers continue to fight for consumer spend. He said:  “Promotional savings and the use of coupons continue and this is helping shoppers to budget and seek out the best deals.

“With consumers still uncertain about when and where to spend, we expect competition for discretionary spend to intensify in both food and non-food retailing, as we head towards the end of the year.”