Shop price inflation fell to a five-month low in November as retailers slashed prices to lure customers through their doors.

The British Retail Consortium's (BRC) monthly monitor of shop prices shows that annual inflation dropped from 3.0 per cent in October to 2.7 per cent in November — the lowest rate since June and a steady fall from the series high of 3.8 per cent reached in August.

The annual increase in food prices eased from 7.5 per cent in October to 7.1 per cent while non-food inflation also fell from 0.7 per cent to 0.4 per cent.

Stephen Robertson, director general of the BRC, said: "High-profile discounting and falling prices for key commodities have brought overall shop price inflation down even more from its peak in August."

Experts said that prices were likely to fall further.

Howard Archer, chief UK and European economist at IHS Global, said: "The shop price deflator seems certain to head down substantially further in December, not only due to the VAT cut from 17.5 per cent to 15 per cent coming into effect, but also because of the substantial discounting, special promotions and "flash sales" that are occurring as increasingly struggling retailers try to entice hard-pressed consumers to part with their cash."

M&S confirmed today that it will hold its second 20 per cent-off one day sale while Debenhams, the UK’s second-biggest department store chain, announced it a three-day sale.

Clothes and shoes are 1.7 per cent cheaper than in November last year, the BRC said, while the cost of electrical goods has dropped by 1.9 per cent.

Fresh food inflation has eased for the third consecutive month from 8.5 per cent in October to 7.2 per cent.

However, shoppers stocking up on tinned and other ambient goods for Christmas will pay more as prices for these items rose by 0.7 per cent in November, taking the annual rate of inflation to 6.8 per cent, up from 5.9 per cent in October.

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