There is no sign of an end to falling shop prices, with overall prices reporting deflation of 1.8% in May, down from 1.7% in April.
Food moved back into deflationary territory in May, with fresh food reporting an acceleration in its deflation rate, falling to 0.8% from 0.5% in April, according to the latest BRC-Nielsen Shop Price Index.
Ambient food inflation fell back to 0.4% in May after accelerating sharply in April to 1.0%.
BRC chief executive Helen Dickinson OBE said: “The fact that today’s figures remain deflationary doesn’t come as a great surprise. We’ve experienced a record run of falling shop prices and, for the time being, there’s little to suggest that’ll end any time soon.
“Looking slightly longer term we know that the recent commodity price increases will start to put pressure on retailers to raise their own prices. We would normally expect these input costs to filter through to prices eventually, but the big question is how far fierce competition in the industry will insulate consumers from price increases.
“If retailers do continue to absorb these costs it’ll be more important than ever that other external costs, business rates chief among them, are brought under control.”
Mike Watkins, head of retailer and business insight at Nielsen added: “Shop price inflation remains below consumer price inflation and falling food prices are still being driven lower by global commodity prices as well as intense competition, which shows no sign of relenting any time soon.
“Non-food prices also continue to fall, and with shoppers indicating that they are becoming more cautious about spending, retailers will have to keep prices the same or probably even lower over the next six months.”