The British Retail Consortium (BRC) has found that shop price inflation has fallen into deflation for the first time in nearly three years.

During the 1st-7th August period, BRC found that shop price deflation was at 0.3% in August, down from inflation of 0.2% in the previous month. This was below the three month average rate of 0%, as shop price annual growth remained at its lowest rate since October 2021.

Food inflation slowed to 2% in August, down from 2.3% in July and below the three-month average rate of 2%. The annual rate “continued to ease” in this category, with inflation at its lowest rate since November 2021.

Fresh food inflation reportedly slowed further in August to 1%, down from 1.4% in July. This was below the three-month average rate of 1.3%, as inflation hit its lowest rate since October 2021.

Ambient food inflation decelerated to 3.4% in August, down from 3.6% in July. BRC found this was below the three-month average rate of 3.7%, the lowest rate since March 2022.

Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Shop prices fell into deflation for the first time in nearly three years. This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families. Food inflation eased with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.

“Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation. The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions. As a result, we could see renewed inflationary pressures over the next year.”