Shoppers' good fortune holds as record run of price falls continues

A record run of falling shop prices is showing no sign of ending, in good news for consumers, according to new figures.

Overall shop deflation of 1.8% in May is broadly in line with the 12-month average, while food moved back into deflationary territory as it continued to fluctuate around the zero mark, according to the BRC-Nielsen Shop Price Index.

Fresh food reported an acceleration in its deflation rate, falling to -0.8% from 0.5% in April.

Shoppers have now been able to fill their baskets and pay less for their goods than the year before for just over the last three years.

British Retail Consortium chief executive Helen Dickinson 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 - so the good news for consumers continues.

"Indeed, with food prices remaining flat at the same time as wages continue to grow means customers will have yet more money in their pockets at the end of their weekly shop.

"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."

Mike Watkins, head of retailer and business insight at Nielsen, said: "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."