LONDON, England - British retailers slashed prices at the fastest rate in at least seven years during the January sales, industry figures showed on Wednesday, highlighting tough trading conditions despite an improving economy.

The British Retail Consortium said shop prices in early January were 1.0 percent lower than at the same time in 2012, the biggest annual decline in any month since the survey started in 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 electrical retailers.

Although Britain's economy grew 1.9 percent last year, the fastest rate since 2007, wages have stagnated and households have had to fund higher spending by cutting saving.

Still, sales have been buoyant.

Official data showed British retailers had the fastest annual sales growth in more than nine years in December, fuelled by smaller stores as some major chains reported a difficult Christmas holiday period.

Tesco and Marks & Spencer, some of the biggest names in British retail, posted heavy falls in sales in the run up to Christmas, although fashion chain Next (NXT.L) enjoyed strong sales.

"January is always a key month for sales and promotions but discounts have been deeper and more widespread than last year and we are seeing this trend continuing," said Helen Dickinson, the BRC's director general.

"Hard-pressed families will also have benefited from the lowest levels of food inflation in almost four years."

The BRC's measure of shop price inflation does not include online retailers or costs such as energy, transport and housing, which feed into the broader official consumer price inflation measure targeted by the Bank of England.

The CPI has fallen sharply in recent months and hit the BoE's 2.0 percent target in December for the first time since 2009. But consumer prices are still rising much faster than wages, leading to accusations of a "cost of living crisis" from the opposition Labour party.

The BRC said non-food prices fell by an annual 2.7 percent in January compared with 2.3 percent in December, while food prices rose 1.5 percent, down from the previous month's 1.7 percent.

The BRC publishes the first comprehensive January sales data for the retail sector next Tuesday.