A 40-year peak in inflation was reached today as households struggle to make ends meet.
The headline CPI rate in July was 10.1%, far higher than experts’ expectations of 9.8%. It increased from 9.4% the previous month.
Since February 1982, when the measure was said to have reached 10.4%, this is the highest number.
However, even that threshold can be broken later in the year, when the Bank of England anticipates the amount to surpass 13%.
The most recent rise may fuel anticipation that the Bank would raise interest rates once again next month, especially in light of reasonably strong employment market data released yesterday.
That would help control rising costs, but it would also cause greater hardship for Britons because of their low earnings.
Although he acknowledged that “things are hard,” Chancellor Nadhim Zahawi cautioned that there are “no simple fixes” and that bringing inflation under control is his “top priority.”
Grant Fitzner, chief economist for the ONS, stated: “A variety of price increases brought inflation up again this month. Significant increases in food costs, especially for bread goods, dairy, meat, and vegetables, were also seen in increased takeout pricing.
Inflation in July was also boosted by price increases for other essentials including pet food, toilet paper, toothbrushes, and deodorants.
The cost of package vacations climbed due to stronger demand after declining at the same period previous year, while flying tickets also went up.
“The price of metals and food, respectively, drove the growth in the cost of both raw materials and commodities leaving manufacturers.”
“I recognise that circumstances are harsh, and people are concerned about price rises that nations throughout the globe are suffering,” Mr. Zahawi said.
“Although there are no simple answers, we are doing everything we can to assist with a £37 billion support package that includes additional payments for the lowest-income individuals, seniors and those with disabilities, as well as £400 off energy bills for everyone in the next months.
“Getting inflation under control is my number one priority, and we are taking action via robust, independent monetary policy, prudent tax and spending choices, and measures to increase productivity and growth.”
A other measure of inflation that is often used to calculate yearly increases in railway prices is scheduled to be announced by the ONS at 9.30am and is anticipated to be considerably higher.
The retail pricing index (RPI) for July is expected to be about 12%, but the Department for Transport has already said that the rise in regulated fares in England in 2023 would be less than the rate of inflation.
While the Scottish Government has not yet revealed its 2019 budget, Wales often alters fares in a similar manner to England.
The UK is predicted to enter a recession later this year, with CPI inflation reaching a high of 13.3%.
The energy price limit, which controls how much more than 20 million families spend on gas and electricity, is set to increase once again in October.
The most recent forecasts indicate that the cap will eventually reach around £3,635. From the existing record-high price limit in effect today, that would represent an increase of 84%.