Consumer Price Inflation (CPI) has fallen to its lowest level for two and a half years, and it's all down to price-cutting by retailers, says the British Retail Consortium.

Stats released by the Office for National Statistics (ONS) this morning put CPI at 2.4%, down from 2.8% in May. According to the ONS, this is down to a drop in the cost of clothing and footwear, as well as food and transport. The BRC says this reflects the high levels of promotional activity across the retail sector, partly drive by poor demand for summer fashions because of the wash-out summer.

BRC director general Stephen Robertson said: "Intense competition between retailers means deep discounting on the high street has become a regular sight. The dismal summer weather, including the wettest June on record, has forced retailers into even more promotional activity in an effort to spark consumer interest in summer clothing and footwear.

"Falling commodity and energy costs are easing pressure on food prices and retailers are rushing to pass this on to consumers. Real disposable incomes are still dropping, meaning pressure on household budgets remains intense, but this welcome news on inflation gives us some hope the balance may be shifting in consumers' and retailers' favour."

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