The deflation rate for non-food retail prices hit 1.3% in the four days between 7 to 11 August, marking the slowest rate of deflation seen since April 2013.
Overall shop price deflation decelerated from the 0.4% fall seen in July to 0.3% in August, according to the British Retail Consortium (BRC) and Nielsen Shop Price Index.
BRC chief executive Helen Dickinson said that prices are heading towards inflation as protection from hedging contracts are coming to an end.
She said: “The reality is that with protection from hedging policies coming to an end, non-food retailers are running out of options for protecting shoppers from the significant increases in the price of imported goods since the EU referendum in June last year. We expect non-food prices to continue trending towards year-on-year inflation.
“While the dynamics of individual elements of the index play out in different ways from month to month, the fact is that the overall pressures on prices are still weighted upwards. That will put an increasing strain on already stretched family budgets.”
Nielsen head of retailer and business insight, Mike Watkins, added: “Whilst consumer sentiment is on the turn and shoppers are becoming cautious about spending on big ticket items, prices are still very competitive on the high street and spend on food and drink has been strong over the summer, albeit disrupted by the changeable weather in August.”