According to the British Retail Consortium (BRC), the U.K. shop prices declined by 2.0% year-on-year in December, after a 2.1% decline in November.

The decline was mainly driven by a drop in non-food prices, which plunged 3.0% year-on-year in December.

Food prices remained unchanged at an annual rate of 0.3% in December.

"With retailers continuing to invest in price, relatively low commodity prices and intense competition a hallmark of the industry, we can expect falling prices to continue in the medium term," BRC Chief Executive, Helen Dickinson, said.