Overall shop prices reported deflation of 2% in June, deepening from a 1.8% decline in May, reports the BRC-Nielsen Shop price Index. Non-food deflation fell to 2.8% in June from 2.7% in May.

In June, furniture and floorcovering prices were down -2.5% YOY, and -0.3% down on the previous month.

Helen Dickinson OBE, BRC chief executive, says: “This month’s figures show overall shop prices falling once again. This extraordinary 38-month run of deflation has undoubtedly been good for consumers. While it has been driven largely by falling prices for non-food items we have, from time-to-time, seen food in deflationary territory as well – which provides the real boon for household budgets.

“While the good news for household budgets continues, prices in store will eventually rise again. However, the time it takes for any price increases to make a reappearance will depend on a combination of factors including the future value of the pound, commodity prices and any eventual impact of the Brexit vote on input costs. That said, there won’t be any instant shocks as any changes will take time to feed through. Continuing fierce competition also means that putting up prices may not be viable for some retailers. For now, and for the short term at least, the good news for consumers is set to continue.”

Mike Watkins, head of retailer and business insight, Nielsen, adds: “Whilst changes in the economic landscape are anticipated next year, the current focus for the industry is the continued deflationary environment. This is good news for shoppers who benefit from falling prices but is added pressure for retailers as they balance increased costs from the national living wage and investment in multichannel, with volatile consumer demand. A return to inflation is not expected just yet, so it's business as usual over the summer months and encouraging shoppers to keep spending is the priority.”