Studies show that the summer sales in the fashion retail sector, where stocks had to be reduced, led to a drop in prices in stores for the first time in three years.

According to the British Retail Consortium (BRC), prices fell 0.3% year-on-year in August, the lowest level since October 2021.

The price drop was driven by non-food items such as clothing and furniture, with retailers offering discounts after wet weather and ongoing cost-of-living pressures hit sales.

Food prices continued to rise, but at a slower pace, according to industry association BRC.

Inflation for fresh food such as fruit, meat and fish recorded its biggest monthly decline since December 2020 thanks to falling costs for suppliers, it said.

However, the BRC said non-food retailers had “applied heavy discounts to clear their summer stocks, particularly in fashion and homewares”.

“These price reductions followed a difficult summer of trading caused by bad weather and the ongoing cost of living crisis that affected many families.”

According to the BRC, non-food prices were 1.5 percent lower in August than a year ago. Food prices rose 2 percent, but this was below the July figure of 2.3 percent.

BRC chief executive Helen Dickinson said while households were “happy” to see falling prices for some goods, there was no guarantee the trend would continue.

“The outlook for commodity prices remains uncertain due to the impact of climate change on domestic and international crops, as well as rising geopolitical tensions,” she said.

“As a result, inflationary pressures could return next year.”

Lindsay James, investment strategist at Quilter Investors, said the wet summer weather had severely damaged clothing sales.

She told the BBC’s “Today” program that while there were “encouraging signs that inflation is coming under control,” the figures were also “a reminder that this economic recovery is fragile.”

The latest official inflation figures – which provide information on how quickly prices are rising overall – showed The interest rate rose to 2.2% in July, the first increase this year.

The increase in July had been widely predicted and was due to the fact that the price decline in gas and electricity was less severe than in the previous year.

The Bank of England forecasts that the inflation rate will rise to around 2.75 percent in the coming months and fall below 2 percent next year.

Inflation rose in 2022 mainly due to a sharp rise in energy prices. Oil and gas were in higher demand after the Covid pandemic, and prices rose again when Russia invaded Ukraine.

The recent slowdown in inflation meant that the The Bank of England was able to cut its base rate from 5.25% to 5% earlier this month – the first cut since the pandemic began in March 2020.

However, the bank’s governor, Andrew Bailey, said at the time that it was necessary to “ensure that inflation remains low and be careful not to cut interest rates too quickly or too much”.

Andrew Murphy, managing director of toy retailer The Entertainer, which has 165 stores in the UK, told the BBC that the cost pressures the company has faced over the past 18 months have “eased somewhat”.

However, he added that the biggest cost not related to the products purchased is wages, which have increased by about 10% this year due to the increase in the national subsistence level and “this value will continue to rise”.