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Last Updated: Wednesday, 3 October 2007, 15:01 GMT 16:01 UK
Food costs send UK prices higher
Loaf of bread
Rising wheat prices have pushed up the cost of bread
Higher food costs were behind rising shop prices in September, according to figures from the British Retail Consortium (BRC).

While non-food prices fell 0.7% against a year ago, this was not enough to offset a 2.7% rise in food prices.

Overall prices were 0.4% higher compared with a year earlier.

Fresh food saw big rises and the BRC said this trend would continue because of flooding in the UK earlier this year and poor crop outputs worldwide.

'Relief'

"Higher feed prices are likely to cause increases in the price of poultry and meats in the near future" said the BRC, adding that commodities such as wheat and barley have already pushed up the price of bread and wheat related goods.

Kevin Hawkins, director general of the BRC, said retailers were trying to keep prices down by offering promotions to consumers.

But he added: "We have yet to see the full effects of high interest rates on consumer spending and a rate cut now by the Bank of England would provide some much needed relief to consumers and retailers alike."

The figures come in advance of the Bank of England's interest rate decision which is due on Thursday.

Analysts had previously expected the Bank to raise interest rates this autumn, but following the recent market turmoil it is now widely thought that rates will stay on hold at 5.75% and could even be lowered.

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