London - Prices in British shops fell last month at a faster pace, driven down by a steep decline in prices for non-food products, the British Retail Consortium said on Wednesday.

The BRC said retail prices in September were 1.8 per cent lower than a year earlier, not far off the record decline of 1.9 per cent seen in July and compared with a 1.6 per cent fall in August.

Prices for non-food products tumbled 3.2 per cent on the year compared with a 2.9 per cent drop in August, with clothing and electricals seeing the sharpest price cuts. “Consumers can take heart that the outlook for inflation remains modest,” said Helen Dickinson, director general of the BRC. “Falling commodity prices, the strengthening of sterling, benign pressure in the supply chain and, critically, fierce competition across the retail industry suggests lower shop prices for consumers will continue.” Britain’s major supermarkets have been engaged in an escalating price war, spurred by discounters like Aldi and Lidl taking a growing market share from traditional rival grocers.

Food prices rose 0.3 per cent in September compared with a year earlier, unchanged from August and equalling the record low from the survey’s seven-year history.

Overall consumer price inflation ran at 1.5 per cent in August, well below the Bank of England’s 2 per cent target, and wages are growing even more slowly - something the BoE has cited as a reason to keep interest rates on hold.

However, BoE Governor Mark Carney has warned that the time for raising rates from record low levels is getting closer, although the exact date would depend on how economic data turns out.

The BRC survey is designed to reflect price changes in 500 of the most commonly bought high street products in shops.