ClickAJob News

UK food prices rose 9.5 per cent in the last year, with fresh food up 10.8 per cent.

The British Retail Consortium (BRC) shop price index rose 3.2 per cent in July – up from a 2.5 per cent rise in June.

Shop prices were pushed up by a 9.5 per cent rise in food prices – up 1.9 per cent from June – while non-food items rose just 0.1 per cent from a year ago and fell 0.8 per cent from June.

Fresh food prices rose 10.8 per cent – as oil price rises hit packaging, transport and refrigeration costs.

Some goods - such as electricals and clothing – are now cheaper than a year ago.

But food prices have been rocketing, despite stores’ attempts to keep a lid on hikes.

"Overall food prices are rising but retailers are keeping increases well below the extra supply and operating costs they face," said Stephen Robertson, BRC director general.

“Falls in the prices of oil and some world food commodities, such as wheat and soya, provide hope but most retail costs remain sharply up on a year ago and are still rising.”

As prices rise, British shoppers are aiming to spend less at the check out.

Mike Watkins, at Nielsen, which compiles the data, said: "Fifty-five per cent of people are now cutting down on their grocery spend as their other bills increase.

"So, while food inflation increased again in July, savings will need to be made by shopping differently to help pay for the other increases in household spend such as energy and fuel."

Howard Archer, chief UK economist at Global Insight, suggested the data could provide a greater push for an interest rate rise tomorrow from the Bank of England.

"The marked jump in shop prices in July may exert some late pressure for an interest rate hike on Thursday," he said.

"However, it remains odds-on that the Bank of England will keep interest rates unchanged as evidence is mounting that the economic downturn is deepening and widening.

"Indeed, we believe that mild recession is now more likely than not."