Overall shop price inflation fell to two per cent year-on-year in November from 2.2 per cent last month, after a proliferation of promotions from retailers.
In the latest monthly Shop Price Index from the British Retail Consortium (BRC) and research group Nielsen, food inflation fell 0.4 per cent in the month to four per cent.
Non-food inflation dropped to 0.9 per cent in November from 1.1 per cent in October, as overall inflation declined for the first time in five months.
Stephen Robertson, BRC Director General, commented: “A fall in food inflation to four per cent shows the highly competitive grocery market is keeping costs down for customers in the run-up to Christmas.
“There’s been no fundamental change in the upward pressure coming from higher costs for wheat and other commodities but stores are holding back the full force of these rises.”
Shop price inflation is lower than the government’s official inflation measure which has been above three per cent for eight consecutive months, and rising petrol and energy prices are currently a bigger pressure on consumers than retail goods.
That said 38 per cent of fast-moving consumer goods are currently on some form of offer, an all time high, and early discounting and the forthcoming VAT rise will likely push up prices again in the new year.
Mike Watkins, Senior Manager for Retailer Services at Nielsen, said: “Whilst it is good news for shoppers that the rate of change in shop prices has slowed this month there is still upward pressure from ambient food and non-food price increases are being held due to seasonal price cutting.
“We remain concerned about the underlying inflationary pressures and the VAT increase in January and whether this impacts the motivation of the already cautious consumer.”