UK food inflation reached its lowest level since February 2005 in August, data from Asda has claimed.

According to Asda's income tracker, food inflation in August fell to its lowest level in three years. Food prices fell in August month-on-month, researchers from the Centre for Economics and Business Research found.

Nevertheless, the Wal-Mart-owned UK retailer warned that it was "important" for retailers to pass these savings along to consumers, who are suffering from the "smallest annual increase" in gross income since April, due to a weakening of earnings growth and rise in unemployment.

"Many of our customers are still cautious despite a year on year increase in spending power," Asda CEO Andy Bond said.

"Our job at Asda is to lower prices aggressively so we can give them the confidence to spend their hard-earned money in the run up to Christmas."