British Retal Consortium director general Bill Moyes said: 'Once again shop prices have fallen as retailers discount in the face of weakening consumer demand. This is further evidence of the pressures faced by the sector. In the short term there are real bargains for customers. In the longer term, the squeeze on margins means that the sector will not be able to create jobs and invest in innovation on anything like the scale of the last few years.

'The figures support the case for a further cut in interest rates and underline the urgent need for the G8 to stimulate the world economy and restore confidence around the world – something we want Tony Blair to press for at the Evian summit next month.'

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