Shop prices in the UK are rising at their highest annual rate since March 2004 even though there has been heavy discounting in some parts of the non-food sector, a leading retailing lobby group said today. In its monthly shop price index, British Retail Consortium (BRC) said prices were 2.3 pct higher in December than the year before, up from the 1.8 pct recorded in November. The December rise is the sixth in a row. "Although there was evidence of discounting, especially within non-food, it was not as prolific as last year," said Kevin Hawkins, BRC's director-general. "Christmas, although not a bonanza, was by no means the disaster some were forecasting," he added. The survey also showed higher food inflation in the wake of commodity and seasonal prices outweighed any discounting. Despite the discounting within the non-food sector, BRC said the non-food index rose 0.7 pct year-on-year, demonstrating sales and promotional activity was not as prolific this year as last. On a monthly basis, shop prices were up 0.3 pct, driven primarily by a 0.6 pct rise in the food index, the highest since February. The non-food index rose by 0.2 pct overall but the increase was not across the board, with falls within the clothing and footwear, electrical and furniture sectors outweighed by the second largest month-on-month rise in 2006 in DIY and hardware. Earlier this week, BRC reported like-for-like sales, which exclude new stores and office space, were up 2.5 pct in December compared with the year before, when sales had picked up by 2.6 pct.