UK inflation hits 10% as cost of living crisis accelerates
Annual consumer price growth reached 10.1% in July, according to data published by the Office for National Statistics on Wednesday, up from 9.4% in June. High food prices – up 12.7% since July 2021 – were the biggest single contributor to the acceleration in inflation, the ONS said.
The headline inflation figure was higher than predicted by a Reuters poll of economists, and food inflation is now at its highest level in 14 years.
“All eleven food and non-alcoholic drink categories contributed upwards to the change in the annual rate of inflation, with prices rising overall this year but falling a year ago,” the ONS said.
The biggest upward contributions came from bread and cereals, and from milk, cheese and eggs, with significant price increases for cheddar cheese and yoghurt.
On a monthly basis, the consumer price index was up 0.6% in July, compared with no change a year ago. Higher petrol and diesel prices, along with rising airfares, were also to blame, the ONS added.
Data published last week showed that the country’s GDP fell by 0.1% in the second quarter of this year.
“miserable” for consumers
And Tuesday’s official labor market report found that payslips rose by 4.7% between April and June, meaning average earnings fell by 3% over the period when inflation is taken into account – the biggest fall in real wages since the ONS started keeping more than 20 records. Years ago.
“The situation is dire for UK consumers, who are currently under pressure from all sides,” Kallum Pickering, senior economist at Berenberg, wrote in a note to clients. “Wages are not rising fast enough to offset rising inflation, but they are rising too fast too [Bank of England’s] like, as it wants to return inflation to target,” he added.
Inflation is forecast to go even higher later this year, driven by further rises in regulated energy bills in October. Electricity prices have already risen by 54% and gas prices by 95.7% in the 12 months to July 2022 due to high wholesale costs, exacerbated by Russia’s invasion of Ukraine in late February.
British government officials are reportedly exploring options to provide more support to households. But Liz Truss, front-runner to succeed Boris Johnson as the next British prime minister in early September, has yet to set out a detailed plan beyond promising tax cuts.
The opposition Labor party is calling for a windfall tax on UK oil and gas companies to be extended to help fund a freeze on household heating bills this winter.
— Anna Cooban and Rob North contributed to this article.
