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LONDON, Feb 5 (Reuters) - British retailers slashed pricesat the fastest rate in at least seven years during the Januarysales, industry figures showed on Wednesday, highlighting toughtrading conditions despite an improving economy.
The British Retail Consortium said shop prices in earlyJanuary were 1.0 percent lower than at the same time in 2012,the biggest annual decline in any month since the survey startedin 2006 and the ninth consecutive month of falling prices.
The price slide deepened from 0.8 percent in December,reflecting widespread discounting by British retailers in sales- and particularly among clothing, furniture and electricalretailers.
Although Britain's economy grew 1.9 percent last year, thefastest rate since 2007, wages have stagnated and householdshave had to fund higher spending by cutting saving.
Still, sales have been buoyant.
Official data showed British retailers had the fastestannual sales growth in more than nine years in December, fuelledby smaller stores as some major chains reported a difficultChristmas holiday period.
Tesco and Marks & Spencer, some of thebiggest names in British retail, posted heavy falls in sales inthe run up to Christmas, although fashion chain Next enjoyed strong sales.
"January is always a key month for sales and promotions butdiscounts have been deeper and more widespread than last yearand we are seeing this trend continuing," said Helen Dickinson,the BRC's director general.
"Hard-pressed families will also have benefited from thelowest levels of food inflation in almost four years."
The BRC's measure of shop price inflation does not includeonline retailers or costs such as energy, transport and housing,which feed into the broader official consumer price inflation(CPI) measure targeted by the Bank of England.
The CPI has fallen sharply in recent months and hit theBoE's 2.0 percent target in December for the first time since2009. But consumer prices are still rising much faster thanwages, leading to accusations of a "cost of living crisis" fromthe opposition Labour party.
The BRC said non-food prices fell by an annual 2.7 percentin January compared with 2.3 percent in December, while foodprices rose 1.5 percent, down from the previous month's 1.7percent.
The BRC publishes the first comprehensive January sales datafor the retail sector next Tuesday.
