Prices at UK tills decreased in January as retailers offered “deep discounts” on things like furniture and fashion, according to the British Retail Consortium, though upcoming increases to labour-market bills could reignite inflationary pressures in the spring.

According to the BRC-NeilsenIQ shop price index for January, shop prices fell 0.4% month-on-month following a flat reading in December.

While food prices rose 0.5%, up from 0.1% the month before, non-food prices reduced by 0.9% after a 0.1% decline previously.

This meant that shop prices were 0.7% lower than they were in January 2024, following a 1.0% year-on-year fall in December.

The annual rate of food inflation, in particular, eased to 1.6% from 1.8%, coming in at its lowest rate since November 2021.

“Extensive January sales was good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion, but less good news for retailers needing to shift excess stock,” said the BRC’s chief executive Helen Dickinson.

“Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer NICs, increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board,” she said.