June shop prices were 2.5 per cent higher than last year but below overall inflation, according to the BRC-Nielsen Shop Price Index.

Food shop prices were up 7 per cent in the month – up from a 6 per cent year-on-year rise in May – despite significant price-hikes in agriculture and oil.

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 7 per cent. Although their own costs are going up, food retailers are running high-profile price cuts and promotions.

Nielsen senior manager retailer services, Mike Watkins said the cost of the weekly shopping basket was rising due to more cost-price inflation in fresh and chilled foods and some staple ambient categories.

“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,” he said.

Non-food prices increased 0.2 per cent, a 0.8 per centage point increase on the 0.4 per cent year-on-year fall recorded in May. The hike was driven by inflation in furniture, floorcoverings, DIY, gardening and hardware, books, stationery and home entertainment. Electricals, clothing and footwear are cheaper year-on-year.

In Scotland, overall shop price inflation rose by the same amount as in the UK – 2.5 per cent.

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