The man who stabbed two people in what has been called a terrorist attack in South London on Sunday used a £3.99, or $5, kitchen knife he had stolen from a hardware store’s shelf moments before the attack.

Staff in the Low Price Store on Streatham High Road in the neighborhood of Streatham told The Daily Telegraph that the attacker had grabbed a knife hanging from a display near the checkout.

The attacker has been named as Sudesh Amman, 20, who had recently been released from serving a prison term relating to terror offenses.

The knife he used had “a marble effect plastic handle and a 10-inch steel blade,” The Telegraph reported.

"He was very quiet when he was in the shop - I thought he was just window shopping," an unnamed member of staff told the paper. "I didn't know that he had something in his mind to take something."

Ambulances are seen in Streatham, London, on Sunday.

Foto: Ambulances in Streatham on Sunday.sourceTwitter/DanSmithNews

"Within 10 meters of leaving the shop he had got the knife out of the cover and thrown it on the pavement," the shop worker said.

"Right in front of my eyes he stabbed the lady," the staff member said.

The two victims of the attack have not yet been named. One, a man in his 40s, is in stable condition at a hospital. The second, a woman in her 50s, has been released from a hospital.

London's Metropolitan Police has called the attack "terrorist-related."

The Islamic State terrorist group on Monday claimed responsibility for the attack.

The stabbing took place at about 2 p.m., said Lucy D'Orsi, the deputy assistant commissioner at the Met, in a statement.

The attacker had a fake explosive device strapped to his body, D'Orsi added.

He had been under police surveillance at the time, as he had just been released from prison, having served half of a three-year, four-month sentence. He was shot dead by the police at the scene of the attack.

He had pleaded guilty to "possession of terrorist documents and disseminating terrorist publication" in December 2018, Reuters reported. This included urging his girlfriend to behead her parents in a text message.