UK shop prices
Shoppers walk along a street in Royal Tunbridge Wells, southern England. (Reuters)

Overall shop prices in the UK declined for the fourth consecutive month in August as prices in non-food categories fell to their lowest level since December 2008 amid widespread discounts and promotions from retailers.

The British Retail Consortium (BRC) said that shop price deflation came in at an annual rate of 0.5% in August, the same as in July.

The price decline was due to a 2.3% annual deflation in non-food items, compared to a 2.1% deflation rate in July. Meanwhile, food prices continued to rise, increasing by 2.5% in August compared with a 2.2% rise in July.

"This is the highest August deflation since our records began, and in line with the previous month's total which showed the biggest drop for six and a half years," BRC director general Helen Dickinson said in a statement.

"A further fall in prices pushed non-food deflation to its lowest rate since December 2008. Discounts and promotions continue to be widespread for fashions and electricals, and health and beauty deflation is at a near five-year high thanks to an abundance of good deals on toiletries and cosmetics.

"Food inflation has edged up marginally in August after the previous month's three-year low, as a result of fresh food prices going back in line with the June rate after extensive promotions on salads and summer fruit and veg caused a dip in July."

Non -Food Sales

In a separate report, the BRC said UK retail sales continued to rise in August primarily due to more consumer spending on home products. Home categories, especially furniture and flooring sales, saw the highest sales growth while sales of food categories slowed down.

An upbeat sales performance indicates that "confidence is slowly but surely returning to the UK's high streets," said David McCorquodale, retail head at KPMG, which sponsors the retail sales survey.

The shop price figures come as a relief for cash-strapped consumers, who have been forced to control their budgets amid low wage growth.

"Many high street and non-food retailers have been holding back on price increases during the summer," said Mike Watkins, Head of Retailer and Business Insight at research firm Nielsen.

Watkins added that overall shop price inflation at supermarkets is still at a low level, despite some seasonal fresh food inflation in August.

"These figures certainly add to the recent run of rosier news, and confirm that retailers are working hard to offer customers the best possible value on their shopping," Dickinson said.

She expects that prices would remain fairly stable, despite some pressures in retailers' pipeline, if the supply chain remains uninterrupted.