Competition among High Street retailers is continuing to keep a lid on shop prices.

The British Retail Consortium's latest Shop Price Index showed retail prices in October were 0.2 per cent lower than 12 months earlier and 1.7 per cent less than November 1997 when it began tracking prices.

The deflationary figures were recorded despite a slight rise in prices between September and October, which the BRC attributed to seasonal factors such as the supply of cheaper tomatoes coming to an end.

But the BRC said that while the fierce competition between retailers had kept prices lower than they were a year ago, there was no evidence of a consumer boom.

A spokeswoman for the BRC said the organisation was "at a loss" as to why the Bank of England's Monetary Policy Committee raised interest rates by 0.25 per cent to 5.5 per cent last week in a move to quell growing inflationary pressures on the economy as a whole.

"Average earnings may have risen but spending on the High Street remains subdued," the spokeswoman said.

"Price deflation is now a reality for retailers.

"General inflation is below the Government's 2.5 per cent target with the upward pressure coming from oil prices which are affected by world supply, not domestic demand."

The BRC index provides an indicator of the direction of price changes in retail outlets each month and aims to paint a picture of the inflation faced by shoppers on 200 of the most commonly bought items.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.