October 1, 2022

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UK inflation hits 10% as cost of living crisis accelerates

UK inflation hits 10% as cost of living crisis accelerates

Annual consumer price inflation hit 10.1% in July, according to data released by the Office for National Statistics on Wednesday, up from 9.4% in June. The Office for National Statistics said high food prices – which have risen 12.7% since July 2021 – were the single largest contributor to accelerating inflation.

The headline inflation number was higher than what a Reuters poll of economists had predicted, and food inflation is now at a 14-year high.

“All eleven categories of food and non-alcoholic beverages contributed to the increase in the annual inflation rate, with prices generally rising this year but declining a year ago,” the Office for National Statistics said.

The largest increased contributions came from bread and cereals, and from milk, cheese and eggs, with notable increases in the prices of cheddar cheese and yoghurt.

On a monthly basis, the CPI rose 0.6% in July, compared with no change a year ago. The office added that the high prices of gasoline and diesel, along with the high prices of flights, are also reasons.

The higher than expected reading will keep pressure on the Bank of England to follow last month’s reading Biggest interest rate hike in 27 years With further increases in interest rates despite mounting evidence of pressure on family budgets and signs that The British economy may have already entered a recession.

Data published last week showed that the country’s gross domestic product declined by 0.1% in the second quarter of this year.

‘miserable’ to consumers

Tuesday’s official labor market report found that paychecks rose 4.7% between April and June, meaning average earnings fell 3% over the period once inflation is taken into account – the biggest drop in real wages since the ONS began In record keeping for more than 20 years.

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“The situation is miserable for UK consumers, who are currently under pressure from all sides,” Calum Pickering, chief economist at Berenberg, wrote in a note to clients. “Wages are not rising fast enough to offset the rise in inflation, but they are rising too fast for [Bank of England’s] Want to get inflation back to target.”

Inflation is expected to pick up later this year, driven by further increases in regulated energy bills in October. Electricity prices have already risen by 54% and gas prices by 95.7% in the twelve months to July 2022 due to rising wholesale costs, which were exacerbated by the Russian invasion of Ukraine in late February.

UK government officials are said to be studying options to provide more support to families. But Liz Truss, the frontrunner to succeed Boris Johnson as the UK’s next prime minister in early September, has yet to put together a detailed plan beyond the promising tax cuts.

The opposition Labor Party is calling for an unexpected tax on UK oil and gas companies to help fund a freeze on home heating bills this winter.

Anna Cuban and Rob North contributed to this article.