Supermarkets are increasing food prices at a faster rate than their costs are rising.

The Producer Price Indices – which measure the price of goods as they leave the factory – revealed food inflation has risen 11.4 per cent in the year to August. However, consumers are paying an extra 12.3 per cent on their grocery bills, according to the most recent Consumer Prices Index.

A loaf of bread costs£1.24, up from 88p, while a dozen eggs jumped from£1.95 to£2.58.

Bank of England governor Mervyn King last month warned that companies would use inflation to camouflage an increase in prices.