Health Story

05 July 2009 01:45 BST

Food prices rise 6.4 per cent

The cost of food in the UK rose by 6.4 per cent year-on-year during May.

The rise of one percentage point in a month comes despite retailers attempts to shield price rises from shoppers.

The British Retail Consortium (BRC) Shop price index shows prices rose annually 1.8 per cent in May – from 1.2 per cent in April – attributed entirely to soaring food prices.

However, the BRC claims the full impact of price rises are not being passed on to shoppers

Stephen Robertson, BRC director general, said: “Intense pressure from rising costs has pushed up the shop price of food but it is clear retailers are continuing to shield customers from the full impact.

"Shop prices have gone up much less than factory gate prices, up nearly ten per cent on last year, and oil prices, up more than 80 per cent.”

He added: “EU figures show UK customers spend the smallest proportion of their income on food of any EU country because UK retailers continue to offer the most competitive prices they can."

The research show supermarkets' push to retain customers, as shoppers budgets are firmly hit, has seen fierce competition and aggressive promotions.

Also electrical good fell in price by 3.6 per cent in the last year and clothing prices were down 2.5 per cent.

The food price rises show further evidence of rising inflation in the UK – now at three per cent according the consumer prices index – ahead of the government' two per cent target.

Inflation rises make it less likely the Bank of England will cut interest rates tomorrow – even though the slowing economy demands a boost.

Howard Archer, chief Uk economist at Global Insight, said: "The marked jump in shop prices in May reinforces belief that the Bank of England will not be cutting interest rates tomorrow.

"Indeed, the data highlight that the Bank of England is trapped between the rock of rising inflation and the hard place of markedly slowing economic activity."