'Intense' competition sees shoppers benefit from four years of falling prices

Consumers are now enjoying their fourth year of falling retail prices as "intense" competition for shoppers drives deflation, figures show.

Shoppers found their purchases 1.8% cheaper last month than at the same time last year, and only marginally different from the 2% recorded in August, according to the BRC-Nielsen Shop Price Index.

Food prices fell by 1.3% in September, the highest year-on-year fall ever recorded for food and only the second time that food prices have fallen by more than 1% since the index began.

Non-food deflation showed a slight slowdown to 2.1% from 2.5% the month before.

The report said fierce competition was playing a vital role in keeping prices down.

Despite rising global food prices and the devaluation of the exchange rate, shop prices were still showing little sign of nearing inflationary territory.

British Retail Consortium chief executive Helen Dickinson said: "We are now in the fourth year of falling shop prices, so the record-setting run of shop price deflation continues, which is great news for consumers.

"This is as a direct result of the intense competition and transformational change in the retail industry, with consumers having access to more choices and greater ability to compare prices than ever before."

Mike Watkins, Nielsen head of retailer and business insight, said: "With a new round price cuts by supermarkets in September and fresh foods also promoted to encourage visits, this has helped maintain deflation in shop prices.

"However, the warm and late summer weather was a challenge for many in the non-food channel so we may well see further price discounts as we move into October."

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