Prices fall in UK shops in April

Prices in British shops continued to fall last month at 1.4% lower than a year earlier, the same rate of decline as in April.

The British Retail Consortium said annual food price inflation held steady at April's record low of 0.7%, while the prices of other goods fell by 2.8% on the year in May, gathering speed from April's 2.7% decline.

"The high street continues to generate little inflationary pressure," said Mike Watkins, head of retailer and business insight at Nielsen, which conducted the survey for the BRC.

May's 1.4% drop in prices is only slightly less than the 1.7% fall recorded in March, which was the biggest drop since the BRC started collecting data in 2006.

The BRC cited bargains in clothing and footwear and 'value as a mainstay' in gardening and DIY to explain the price falls.

The BRC figures show a much lower rate of inflation than the broader consumer price inflation measure targeted by the Bank of England, which include faster-rising costs such as utility bills, entertainment, healthcare and university tuition.

Consumer price inflation rose to 1.8% in April, just below the BoE's 2% target.

Nielsen's Watkins said he expected competitive prices to boost consumer demand over the coming months.

"The outlook for the next three months is for relatively stable shop price inflation. Helped by the increases in consumer confidence since the start of the year, this should encourage shoppers to spend more freely over the summer months," he added.