The London Retail Consortium (LRC) has reported that prices in the capital increased by 0.52 per cent in December.
The shop price index (SPI) in London has been rising every month for the past five months. The overall SPI rise through the UK was 0.29 per cent, just over half of the increase in the capital.
Kevin Hawkins, director of the LRC, said although the prices have risen, shopping in London is still comparatively reasonably priced.
"Although December saw the largest month-on-month rise during the year, the shop price index for the capital is still substantially lower than for the UK as a whole."
The SPI index for London stands at 97.50, below the UK index of 99.31.
Mr Hawkins commented on the impact interest rate rises could have on shop owners: "With consumer confidence in the economy remaining fragile, and November's interest rate rise yet to filter through, an early interest rate rise would be bad news for retailers."
The LRC also noted that discounting in the capital was restricted to certain sectors; mainly footwear, electrical items and clothing.
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