Pricing pressures showed continued signs of easing in February as shop price deflation increased to 0.8% for the month, marking a fall in prices for 58 consecutive months.
Figures released by the British Retail Consortium (BRC) show the February drop in prices compares to a 0.2% rate of deflation in January.
Non-food prices experienced deflation of 2.2% for February, compared to 1.9% in January.
Helen Dickinson, chief executive of the BRC, said the figures suggest a recovery following the collapse of the pound in June 2016, after the Brexit vote, but noted that tough times still lie ahead for many retailers.
“This is a further sign that we have passed the peak of the upward pressure on inflation caused by the fall in the pound in June 2016,” she said. “This will ease the squeeze on consumer incomes over the coming year, but it’s likely to do little to lift the rate of growth in consumption. Earnings are still falling in real terms, despite wages increasing, and savings are unlikely to provide the same support to spending that they have over the last 18 months.
“While it’s good news that earnings and inflation are heading in the right directions for consumers, retailers can expect to see more of the same tough trading environment over the coming months.”
Dickinson also called on the government to provide greater clarity on the ongoing Brexit negotiations.