Food prices are rising at their fastest rate since records began, which could restrict the Bank of England’s scope for cutting interest rates.

Wholesale food prices have climbed 7.4 per cent in the past 12 months – the highest since 1992, according to the Official for National Statistics. The hike has driven up the cost of a consumer’s average basket of groceries 12 per cent.

The rises – driving a£750 increase in the annual food bill of the average family – will put increasing pressure on millions of families that face soaring council tax and energy bills, as well as stagnating house prices.

Rising inflation will limit the Bank of England’s ability to cut the interest rate from 5.5 per cent, which many hard-pressed retailers have been calling for. The Consumer Prices Index stands at 2.1 per cent, which is above the Bank of England's target.

MySupermarket.co.uk reported sizeable increases in the price of food it tracks at the three biggest supermarkets – Tesco, Asda and Sainsbury’s. For instance, a kilogram bag of frozen peas at Tesco went up from£1.19 at the end of 2006 to£1.79 at the end of 2007. Asda increased the price of a 500g bag of parsnips to£1.76 at the end of 2007, up from 98p a year earlier. And Sainsbury’s has raised the price of a dozen free-range eggs from£1.62 to£2.35 over the same period.

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