Although shop prices dipped by 0.7 per cent between June and July, that still left them 0.69 per cent higher year on year - the first such increase since last September and the steepest for two years.
The British Retail Consortium said this rise in its shop price index was driven by a pick-up in seasonal food prices and smaller price cuts in this year's July sales.
"After almost a year of price deflation, July saw an upturn in prices compared to a year ago, driven by seasonal food prices, which have now shown a year-on-year increase for three consecutive months," said Kevin Hawkins, the BRC's director general.
"In July, 2005, we also saw extremely heavy discounting and this July's increase must be seen against a very low inflation rate last year," he added.
"Retailers continue to resist passing cost increases on to their, so despite the year-on-year rise, the July figure was substantially down on June."
Cost pressures such as those from fuel and energy bills, are clearly not being passed on to the consumer, Mr Hawkins suggested.