THE underlying rate of inflation was unchanged last month despite a further surge in food prices, new figures reveal.

The Office for National Statistics (ONS) said the underlying rate, which excludes mortgage interest payments, stayed at 2.4 per cent, just below the Chancellor's 2.5 per cent target.

Food prices continued to soar, up 5.6 per cent from a year ago, the highest annual increase for nearly six years.

The cost of pork, poultry and soft drinks all rose sharply, compared to a year ago when shoppers were able to benefit from a wave of special offers.

Despite the inflationary pressure, relatively stable petrol and oil prices helped keep the cost of borrowing in check.

While petrol prices at the forecourt saw little change in the month, this compares to a 4p-per-litre rise in June last year when oil companies were concerned about a shortfall in supply.

The figures are in line with City expectations, although some analysts had pencilled in a slight fall to 2.3 per cent.

The headline rate of inflation, which includes mortgage interest payments, fell 0.2 per cent to 1.9 per cent in June as home owners benefited from the Bank of England's interest rate cut in May.

The average mortgage interest rate fell by 0.29 percentage points during the month, the ONS said.

Other small downward effects came from price changes for rents and home insurance.

The figures come a month after inflation was shown to have soared in May by 0.4 per cent, its highest rate for more than two years.

The jump, attributed to a surge in seasonal food prices following poor weather earlier in the year, dashed hopes of a further cut in interest rates.

Analysts said the Bank of England feared another cut would fuel consumer spending and push inflation above the Chancellor's target.

The ONS showed that in June, retailers had managed to keep prices relatively high, with discounts on items such as clothing below last year's levels. Second-hand car prices also rose in a month where they have fallen for the past five years