Shop price inflation fell in January to its lowest rate since May 2022 as retailers offered heavy discounts to entice customers, figures show.

January’s shop prices eased to 2.9 per cent higher than a year ago, down from 4.3% in December and below the three-month average of 3.9 per cent, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Inflation on non-food products fell to 1.3 per cent in January, down from 3.1 per cent in December – the lowest rate since February 2022.

Food inflation also slowed, to 6.1 per cent in January from December’s 6.7 per cent, the ninth consecutive fall and the lowest rate since June 2022.

The BRC said the easing is “good news for the morning brew” as the price of tea and milk fell, while alcohol remained more expensive on the back of increased duties.

Fresh food inflation slowed further to 4.9 per cent, down from 5.4 per cent a month earlier.

BRC chief executive Helen Dickinson said: “Some new year cheer as January shop price inflation slid to its lowest level since May 2022.

“Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.

“Rising geopolitical tensions will also add to uncertainty and costs in supply chains.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Shoppers are seeing savings at the checkout, with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall.

“However, consumer demand remains fragile as most households are yet to feel better off after nearly two years of inflation.”

How is inflation measured in the UK?

According to the Bank of England, inflation is the measure of how much the prices of goods and services have gone up over time.

It says: "Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate."

It added that if the inflation rate is three per cent, the prices are on average three per cent higher than the previous year

In the UK, inflation is measured by the Office for National Statistics which collects the prices for 700 items.

It then uses this 'shopping basket' to work out the Consumer Price Index (CPI) which is the country's official measure of inflation.