by business editor Trevor Sturgess

Food prices are rising amid fears that wheat shortages could push up the cost of bread and other essentials.

While the latest BRC-Nielsen Shop Price Index showed shop prices continuing to stay low, there are concerns about rising food costs.

Stephen Robertson, BRC director-general, said: "Food inflation was higher than the previous month - driven by global factors putting pressure on the cost of fresh food, such as meat and fruit. The recent dry weather has increased the price of animal feed and poor harvests have reduced some fruit crops."

He warned at problems with production in large wheat-exporting countries, such as Russia and Canada, could put pressure on overall food inflation in the coming months.

Overall retail price inflation remained unchanged at 1.5 per cent in July, although the cost of food went up to 2.5 per cent (1.7 per cent in June). Non-food inflation slowed to one per cent in July from 1.4 per cent in June.

Mr Robertson said the overall picture was good news for customers. "Shop price inflation remained low and well below other measures of inflation as a slowdown in non-food prices compensated for an increase in food inflation.

"Shop prices have remained stable largely due to aggressive discounting driving non-food inflation down to its lowest rate since November 2009. The price of furniture and flooring fell for the first time in seven months."

Mike Watkins, senior retailer services manager with Nielsen, added that despite attractive and short term offers for the World Cup, there had been little sustainable sales growth for food retailers.

"With shoppers indicating that they are becoming more cautious about spending, both food and non-food retailers are continuing to focus on delivering price cuts and reinforcing this with value for money promotions," he said.