Food inflation remains high, with rising sugar prices pushing up the cost of sweets and chocolate, according to the British Retail Consortium.
Consumers are facing food prices 3.2% higher than they were in May of last year, according to the trade group. Inflation for fresh food has slowed to 2% but prices for non-refrigerated foods are still up 4.8% from a year ago.
BRC chief executive Helen Dickinson said global markets were still hitting British shoppers.
She said: “Food inflation continues to trend upwards, with sugar products in particular continuing to be impacted by higher global sugar prices.”
Sugar prices on the world market have fallen in recent months, according to data from the United Nations Food and Agriculture Organization, but costs remain about 15% higher than they were at the time of Russia's invasion of Ukraine in February 2022.
Non-food items in stores are now 0.8% cheaper than a year ago, according to the BRC.
“Retailers are slashing prices on furniture in an attempt to revive depressed consumer demand for big-ticket items, while football fans are able to pick up bargains on TVs and other audio-visual equipment ahead of this summer's Euros,” Dickinson said.
The overall decline in store price inflation to 0.6%, the lowest since November 2021, supports the view that the cost of living crisis is coming to an end.
As a result, economists expect the Bank of England could cut interest rates later this year from their current 16-year high of 5.25%, which would mark the first cut in borrowing costs since Governor Andrew Bailey's Monetary Policy Committee began raising the base rate from 0.1% in December 2021 to tackle rising inflation.
But retailers have so far struggled to translate the decline in inflation into sales.
Official figures on Friday showed retail sales fell 2.3% between April and May as wet weather kept shoppers at home rather than in busy streets.
Even online sales are down, suggesting that households are keeping a tighter grip on their purse strings rather than simply shifting their in-store shopping budgets to internet retailers.
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