The price-cutting by retailers has caused the Consumer Price Inflation (CPI) to fall to its lowest level for two and a half years.
Government figures from the Office for National Statistics (ONS) put CPI at 2.4 per cent, which is down from 2.8 per cent in May.
The largest downward pressures have come mainly from the decrease in the cost of clothing and footwear. This is due to the recent rainfall which has resulted in poor demand for summer fashions.
British Retail Consortium 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.”