Retail prices have risen less than overall inflation, it was confirmed this week.

The British Retail Consortium (BRC)-Nielsen Shop Price Index (SPI) for the UK reports that a high proportion of overall inflation - which reached 2.5 per cent in June - has been driven by food, with an annual inflation of 7.0 per cent.

The largest proportion of food inflation can be attributed to fresh products, which saw an annual inflation of 8.4 per cent, while ambient inflation was at 5.1 per cent.

BRC director general Stephen Robertson said: “Despite annual increases of 60 and 80 per cent in world agricultural prices and oil respectively, UK food prices have only increased by seven per cent. Although their own costs are going up, food retailers are running high-profile price cuts and promotions. They are keeping prices to customers down by cutting costs and increasing sales.

“Overall shop price rises remain well below the official inflation rate as measured by the consumer price index (CPI),” he added.

Mike Watkins, senior manager of retailer services at Nielsen said: “In recent weeks, we’ve seen more cost price inflation in fresh and chilled foods as well as in some staple ambient categories, and this is adding to the cost of the weekly shopping basket. As a result, we’re seeing further price cuts by the major supermarkets to stimulate demand at a time when many households are under increased cost pressures from higher fuel and utility bills.”

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