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The cost of food in shops rose sharply last month as the price of raw ingredients soared. The price of food at the checkout rose by 1.6 per cent in April, driving the annual rate of food inflation to a high of 6 per cent, new figures show.
This is the highest figure since comparable records began in December 2006, and up from 4.7 per cent in April and 4.1 per cent in March.
The cost of fresh food has risen by 6.4 per cent since May last year while the price of ambient food, such as cereals and tinned goods, has increased by 5.4 per cent, the British Retail Consortium (BRC) said.
But the BRC said that retailers were still shielding shoppers from the brunt of the increase in the cost of commodities. Stephen Robertson, director general of the BRC, said: "Shop prices have gone up much less than factory gate prices, up nearly 10 per cent on last year, and oil prices, up more than 80 per cent."
Overall shop prices also rose sharply by 1.8 per cent year-on-year in May, up from 1.2 per cent in April and 1.1 per cent in March, pushed higher by the increased cost of food.
Non-food prices fell by 0.4 per cent year-on-year, the 17th consecutive monthly fall.
"Deflation has mainly been driven by electrical, clothing and footwear. Overall shop price rises are again below the Government's measure of inflation." Mr Robertson said.
Analysts say this data will dent hopes that the Bank of England MPC may cut interest rates tomorrow.
Howard Archer, of Global Insight, the economics consultancy, said that this data would probably hinder any move by the MPC, despite new figures suggesting that service sector activity contracted in May.
"This highlights that the Bank of England is trapped between the rock of rising inflation and the hard place of markedly slowing economic activity. Going forward, we expect muted consumer spending to increasingly dilute retailers' pricing power and facilitate further interest rate cuts. However, the Bank of England is likely to want to see clear evidence of this before acting," Mr Archer said.
Mike Watkins, of Neilsen, which conducted the research for the BRC, said that early summer sales could be on the cards. "For high street retailers, demand has already weakened and prices have to remain competitive in order to maintain sales. This could mean summer discounts starting sooner rather than later."
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