High street prices continue to fall
Supermarket till wars and discounts on clothes and electrical goods led shop prices to fall at their steepest rate for at least eight years last month.
Shop price deflation hit 1.8% in June from a year ago after a rate of 1.4% in May, according to the British Retail Consortium/Nielsen shop price index.
This was the deepest level of deflation since the BRC began producing these numbers in December 2006, and was the 14th month in a row shop prices have fallen.
For food prices, inflation was also at an eight-year low as major supermarkets cut prices as they fought discounters such as Aldi and Lidl in a bid to retain market share.
Food prices rose 0.6% in June, again the lowest the index has seen since December 2006.
British Retail Consortium director general Helen Dickinson said: "This is the deepest level of deflation in non-food and the lowest rate of inflation for food since 2006 when our records began."
She added: "The backdrop was equally promising with stable commodity markets and the continued strength of sterling suggesting inflation is set to remain low in the medium term."
The report added that apart from volatile coffee prices, due to a drought in Brazil, the global outlook for rising commodity prices "remains modest".
Prices also fell sharply for non-food items, with the overall rate accelerating to 3.4% last month from 2.8%.
Non-food prices fell fastest among c lothing retailers with deflation hitting 13.7% from 11.4%, while electrical goods fell 4% in June compared to 3.1% in May.
Nielsen's head of retail and business insight Mike Watkins said: "Food inflation is still low, many supermarkets are price cutting and non-food prices remain deflationary, so the high street continues to generate little inflationary pressure."