Non-food retail inflation in the UK was unchanged at 1.3% in July as retailers combated falling sales with continued price cuts and promotions.

Overall shop price inflation slowed to 2.8% in July, compared to 2.9% in June, according to the BRC-Nielsen Shop Price Index.

“The fall in overall shop price inflation came almost entirely from food,” said Stephen Robertson, British Retail Consortium director general.

“High world commodity costs and import inflation resulting from rising prices in China are still the key factors behind shop price rises.

“Non-food inflation was virtually unchanged from June but is still remarkably low, especially since these figures include the effect of the VAT rise.”

Mike Watkins, senior manager, retailer services, at Nielsen, said sales volumes had slowed in recent weeks as shoppers looked to save money to pay for increases in household costs.

He added: “Retailers have responded with a continuation of price cuts and promotions to stimulate demand at a time when many households are shopping differently to help manage household budgets.

“Looking ahead, we are optimistic that whilst prices will still be higher than last year, the rate of increase may start to slow later in the year.”