Annual shop price inflation in May slipped 0.1% from a 0.4% increase in April, the first time it has deflated for more than three and a half years.
This was pulled down by the non-food category which deflated by 1.5% in May, accelerating from the 1% deflation recorded in April.
The non-food deflation hit its lowest level in almost four years, according to the British Retail Consortium-Nielsen Shop Price Index.
Meanwhile food price inflation slowed to 2.4% in May down from 2.9% in April, hitting its lowest level since June 2010.
British Retail Consortium director general Helen Dickinson said the figures reflect the increased promotional activity retailers have been using to shift seasonal stock which didn’t sell as well as hoped due to the cooler weather.
She added: “Times remain tough, but it seems that retailers are reading the market well and doing what they can to offer customers the best possible value on their shopping.”
Across non-food, retailers cut prices across clothing and footwear, electricals and furniture and floorcoverings, which all recorded deeper rates of deflation.
Supermarkets were able to cut prices as falls on commodity costs across wheat and corn were passed through to prices on breads, cereals and meat.
Nielsen head of retailer and business insight Mike Watkins said: “With a squeeze on real incomes continuing in 2013, falling shop prices will be welcomed by cash-strapped shoppers. However, with levels of recent consumer spend also being impacted by the weather, there continues to be a dependency by many retailers to use vouchers or coupons to drive footfall.
“Nevertheless, with food inflation slowing as we finally start summer, the outlook for the next three months is looking much brighter.”