Annual shopper worth inflation hit 10.1% in July, in accordance with information revealed by the Office for National Statistics on Wednesday, up from 9.4% in June. Soaring meals costs — up 12.7% since July 2021 — have been the most important single contributor to the acceleration in inflation, the ONS stated.
The headline inflation quantity was increased than predicted by a Reuters ballot of economists, and meals inflation is now working at its highest stage in 14 years.
“All the eleven meals and non-alcoholic beverage lessons made upward contributions to the change within the annual inflation fee, the place costs total rose this yr however fell a yr in the past,” the ONS stated.
The largest upward contributions got here from bread and cereals, and from milk, cheese and eggs, with notable worth will increase in cheddar cheese and yoghurts.
On a month-to-month foundation, the patron worth index was up 0.6% in July, in contrast with no change a yr in the past. Higher gasoline and diesel costs, along with rising air fares, have been additionally guilty, the ONS added.
The higher-than-expected studying will maintain the strain on the Bank of England to observe final month’s largest improve in rates of interest in 27 years with additional fee hikes regardless of mounting proof of the strain on family budgets and indicators that the UK economic system could have already got entered a recession.
Data revealed final week confirmed that the nation’s GDP dropped by 0.1% within the second quarter of this yr.
‘Miserable’ for shoppers
And Tuesday’s official labor market report discovered that paychecks rose by 4.7% between April and June, which means common incomes fell by 3% in the course of the interval as soon as inflation is taken under consideration — the most important drop in actual wages because the ONS started protecting information greater than 20 years in the past.
“The scenario is depressing for UK shoppers, who’re at the moment being squeezed from all sides,” wrote Kallum Pickering, senior economist at Berenberg, in a observe to purchasers. “Wages will not be rising quick sufficient to offset surging inflation, however they’re rising too quick for the [Bank of England’s] liking, because it desires to return inflation to focus on,” he added.
Inflation is forecast to go even increased later this yr, pushed by additional rises in regulated power payments in October. Electricity costs have already risen by 54% and fuel costs by 95.7% within the 12 months to July 2022 due to rocketing wholesale prices, worsened by Russia’s invasion of Ukraine in late February.
UK authorities officers are reportedly analyzing choices to supply extra assist to households. But Liz Truss, frontrunner to succeed Boris Johnson as subsequent UK prime minister in early September, has but to set out an in depth plan past promising tax cuts.
The opposition Labour Party is asking for a windfall tax on UK oil and fuel firms to be prolonged to assist fund a freeze in family heating payments this winter.
— Anna Cooban and Rob North contributed to this text.