The overall shop prices in the UK have declined from 0.3% in November to 0.8% in December 2013, according to the British Retail Consortium (BRC) and Nielsen Shop Price Index December 2013.

The prices have been continuously falling for the last eight months and are lowest since the index began in December 2006.

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BRC director general Helen Dickinson said this bodes well for cash-conscious customers, and confirms their predictions that retailers worked hard to help budgets go that bit further during the Christmas.

The December 2013 index also found that food inflation slowed to 1.7% from 2.3% in November, and non-food deflation increased from 2% in November to 2.3% in December 2013.

Non-food prices fell further in December, reflecting the widespread promotional activity as retailers competed for all-important Christmas sales.

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"Many categories remained deflationary, while prices fell for books, entertainment and home improvement products to attract shoppers preparing for the festive break. It’s also worth noting that ‘Cyber Monday’ fell in the period covered by the index, so discounting was particularly commonplace, with many retailers offering to match or beat offers found elsewhere," Dickinson added.

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"Food inflation fell to its lowest level since June 2010, driven mainly by significant easing of prices for fresh and ambient goods. With few signs of volatility in the supply chain at present, I would expect retailers to continue helping to keep the cost of living down, with prices settling at relatively low levels in the coming months."

Nielsen retailer and business insight head Mike Watkins said with food inflation slowing in December, this will have brought a festive cheer to shoppers filling their trolleys with food and drink at supermarkets, especially as Christmas fell later this year.

"With the continuation of price cuts and promotions across all of retailing and with many shoppers holding back on shopping to the last week, there will have been bargains and some great savings for the savvy Christmas shopper," Watkins added.