LONDON (Reuters) - Prices in British shops fell last month at the fastest rate since records began seven-and-a-half years ago, the British Retail Consortium said on Wednesday,
marking 15 months of sinking prices.
The BRC said retail prices in July were 1.9 percent lower than a year earlier, marking the largest decline in shop prices since the series started in December 2006. Prices had fallen by 1.8 percent in June.
Food prices rose just 0.3 percent, also the smallest rise on record, compared with 0.6 percent in the previous month. The BRC said there was deep and widespread discounting across grocery stores.
Prices for furniture, electrical goods and gardening tools fell at a faster rate in July, the BRC said.
"Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue," said Helen Dickinson, the BRC's director general.
Official data last month showed consumer price inflation (CPI) increased to 1.9 percent in June, just below the Bank of England's 2 percent target, although economists said the rise was driven by one-off factors.
CPI measures a wider basket of goods and services than the BRC index, which covers 500 products commonly bought in shops.
Business surveys over the last week showed price pressures were muted in services and manufacturing companies that comprise the bulk of Britain's economy.
The BRC said recent announcements from major supermarkets suggested shop price inflation would stay weak for the coming months.
Britain's four biggest grocers - Tesco, Sainsbury's, Morrisons and Wal-Mart's Asda - have been trying to win back market share that they have lost to discounters like Aldi and Lidl.
Reporting by Andy Bruce; Editing by Hugh Lawson