Overall shop prices reported deflation for the ninth consecutive month in January, accelerating to 1 per cent from 0.8 per cent in December.
This is the deepest level of deflation since the series began in December 2006.
Food inflation slowed to 1.5 per cent from 1.7 per cent in December. Non-food reported annual deflation of 2.7 per cent in January from 2.3 per cent in December.
Helen Dickinson, British Retail Consortium Director General, said: “Shop prices are falling at their fastest rate for 7 years, a new record for our data. January is always a key month for sales and promotions but discounts have been deeper and more widespread than last year and we are seeing this trend continuing. Our figures show that there have been particularly good deals to be had in clothing, furniture and electrical items this month as retailers prepare for their new collections.
“Hard pressed families will also have benefitted from the lowest levels of food inflation in almost four years. Our food retailer members have managed to keep prices low again and with relatively stable commodity prices at the moment as well, and forecasts for commodities quite upbeat, we may continue to benefit from this for some time yet.”
Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: “The start of 2014 has seen a continuation of both slow retail growth particularly in food, and a continuation of slowing inflation. With the first few weeks of January a time when many households take stock of personal finances, the fall in shop price inflation will be a welcome boost for consumers.”
Leading think tank The National Institute of Economic and Social Research (NIESR) says that Britons will have to wait six further years before their inflation-adjusted wages will return to pre-crisis levels despite upgrading its forecast for growth in the wider economy.