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The British Retail Consortium said food price inflation has escalated, The Times of London reported Wednesday. In June, the annual food inflation figure stood at 7 percent, The Times said.

In July, prices at the supermarket rose 3.2 percent, the report said.

As the Bank of England's Monetary Policy Committee begins two days of deliberations over the bank's key lending rates, economists said the inflation figures puts pressure on the bank to raise rates to slow spending.

However, economic growth has slowed.

"The Bank of England remains tightly trapped between the rock of rising inflation and the hard place of markedly slowing economic activity", said Howard Archer, an economist at Global Insight.

"Going forward we expect muted consumer spending to increasingly dilute retailers' pricing power and ultimately facilitate interest rate cuts", he told The Times.

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