The BRC Nielsen Shop Price Index showed that shop prices continued to deflate throughout May.

Their research reports that shop prices deflated by 1.8% in the last month, a further decline than April’s 1.7% and roughly fits in with the average over the last 12 months.

Deflation in non-food shops also slowed in line with the 12 month average, from 2.9% in April to -2.7% in May.

British Retail Consortium Chief Executive, Helen Dickinson OBE, said that it was no surprise to see the most recent figures are still deflationary after the record run of shop prices falling.

Ms Dickinson added that there is little suggestion that this trend will cease in the near future, meaning a continuation of good news for consumers.

She continued to say that with wages growing and the price of food remaining at the same level, customers should find that they have more money left over after doing their food shopping.

She also said that in the long term retailers will be pressured into raising their prices due to the commodity price rises we have seen recently. Normally these input costs would be expected to eventually filter down to prices, but it is now a matter of the extent to which consumers will be insulated from price increases due to fierce industry competition.

Nielsen’s Head of Retail and Business Insight, Mike Watkins, said that inflation in shop prices continues to fall under consumer price inflation and that food prices are continuing to fall because of intense competition and global commodity prices. Furthermore, there is no signs that this fall will relent in the near future.

Mr Watkins added that with the prices in non-food shops continuing to fall, and with trends showing that shoppers are spending more cautiously, retailers are going to have to maintain current prices, or even lower them, in the next six month period.