Non-food inflation slowed to 0.8% in May from 1.2% in April, reflecting the need for continued promotional activity in a bid to stimulate sales.

Overall shop price inflation slowed to 2.3% in May from 2.5% the previous month, while food inflation saw a slight increase from 4.7% to 4.9% in May, driven by the rising cost of key commodities, as well as dry weather and global demand.

The price of oil, up 50% on a year ago, combined with rising gas and electricity prices continue to push up costs at every stage of the supply chain, said the BRC.

However, BRC director general Stephen Robertson explained: "Even though the VAT rate went up 2.5 percentage points in January, non-food goods are less than 1% higher than last year - reflecting weak demand and retailers' need to use promotions and discounts to generate sales."

He added: "Overall shop price inflation fell to 2.3%, almost half the Consumer Price Index, showing rising utility and insurance costs are hitting households much harder than shop prices."

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