Supermarket prices have fallen 0.7% since last month, thanks to lower prices pretty much across the board, say Alex Beckett and Michael Barker

While the big freeze will be remembered in the history books as the biggest event of the 2009/2010 winter, the return of inflation in January at the highest level in two years, The Grocer revealed last month sparked a flurry of media headlines, and the return of VAT to 17.5% was closely examined, as retailers appeared to simultaneously and unconnectedly push through price rises following the Christmas promotions frenzy.

This month, however, inflationary fears appear to have waned, at least for the time being, as new figures from The Grocer Price Index (GPI) show supermarket prices have fallen 0.7% since last month.

Frozen food and household products recorded the biggest price drops down 2.9% apiece, with promotions key to the fall, according to Birds Eye MD Anne Murphy. "The volume being sold on deal is a big dynamic for the frozen category and we must be careful we're not conditioning consumers to only buy on deal," she said.

Dairy prices are 2.1% down month-on-month as the impact of falling wholesale butter and Cheddar prices was passed on to retail, although they still remain high compared with a year ago, when the EC intervened to prop up the troubled European dairy sector.

Numerous promotions, including round-pound deals and multibuys, have kept fruit and veg prices low, as supermarkets seek to increase fresh produce consumption.

Conversely, the trend of alcohol prices increasing is continuing with a 1.3% lift, bringing further grief for drinkers following January's 2.5% price hike, as supermarkets cut the number of deals in the category by 15% (The Grocer, 23 January).

The biggest price rises in the past month, however, were for meat, poultry and fish, with the basket 1.8% higher than last month. The increase has been driven, in particular, by rising chicken and lamb prices.

The strong euro and the cost for producers of switching to higher welfare rules have hit poultry, while tighter demand has sent the price of lamb skywards.

And there could be further price increases on the horizon, with particular concern around fuel prices, with Brent Crude up 5.2% last week alone.