Shocking new data reveals that the cost of basic food products has increased by as much as 34%, exposing the actual impact of inflation as it hit another 40-year high today.
According to recent data, the headline CPI rate was 10.1% in July, far higher than experts’ expectations of 9.8%. It increased from 9.4% the previous month, mostly due to rising gasoline and food expenses.
With the cost of living problem driving up costs on everything from package vacations to fish and chips to toothbrushes, it is the highest inflation rate since February 1982, when the measure was reported to have been 10.4%.
The cost of low fat milk increased by 34% on average over the last 12 months, according to the most recent statistics from the Office of National Statistics, and a number of other grocery goods have also increased much faster than the rate of inflation (ONS).
Other dairy products also topped the list, with whole milk rising by 28.1% during the same time period, butter by 27.1%, and cheese by 17%.
Other necessities including eggs, jam and honey, and olive oil saw increases of 23.6%, 21.2%, and 14.6%, respectively.
Hargreaves Lansdown analyst Susannah Streeter told the Evening Standard that there isn’t much of a respite in sight for consumers who are struggling mightily to make ends meet.
In light of the impending unpleasant increases in energy costs as well as the sharp price increases in supermarkets, many customers are already facing difficult decisions over how to allocate their shrinking finances.
“Households will fight against this flood of inflation as a sweltering summer of price increases meld into a very miserable Autumn and a winter of suffering.”
The ONS data also revealed significant increases in the prices of chicken (16.1%), fish (13.4%), and crisps (13.4 per cent).
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 driven up 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.”
As the Bank of England anticipates inflation to reach 13% later this year, analysts say the current inflation pace may be broken.
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.
Business leaders have said that Boris Johnson, who is vacationing, is on “shore leave” and have expressed concern that there is “no captain” in Downing Street to handle the issues.
His potential successors have been fighting each other for control of No. 10 while exchanging punches. Liz Truss is the “perfect person,” according to former Cabinet minister Sajid Javid, to handle the problem.
Rishi Sunak, however, criticised her plans as a “moral failure” to assist the most at-risk families.
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.”
Ms. Truss said she would address inflation during hustings in Northern Ireland, but added that if taxes remained too high, less money would be generated for the public coffers.
I believe that our economy has reached a point where taxes are excessive and may be inhibiting growth, she added.
Mr. Sunak, for his part, stated: “I feel that we have to immediately provide financial help to vulnerable groups, such as those on low incomes and seniors, since a tax reduction does not work for such individuals.
Liz’s strategy is to suggest that she favours tax reductions above direct assistance. I don’t believe that’s fair since a tax reduction would provide $1,700 in assistance to someone making her wage.
According to him, a retiree who is not working would get a tax break of “precisely nothing” compared to someone earning the national living wage, who would receive a tax break worth £1 a week.
Mr. Sunak said, “That’s not a strategy I believe is appropriate for our nation.”
“The Conservative Government will not be forgiven for that if we don’t immediately assist those vulnerable populations, those with the lowest earnings, and those retirees.”
“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.
“Bringing inflation under control is my top goal, and we are acting via strong, independent monetary policy, sensible tax and spending choices, and measures to foster productivity and development,” the president said.
RPI inflation, according to separate government figures, hit 12.3% in July.
This policy has previously been used to restrict price increases for select railway tickets in England, Scotland, and Wales the following year.
The UK Government will keep the hikes in 2023 below RPI because of the rapidly rising inflation rate.
It hasn’t said how it intends to determine the hikes, however.
The UK is expected to enter a recession when CPI inflation peaks later this year at 13.3%, according to the Bank of England.
The energy price limit, which controls the cost of gas and electricity for more than 20 million homes, is set to increase once again in October.
The most recent projections place the cap at around £3,635. In comparison to the already record-breaking price ceiling today, it would represent an increase of 84%.
However, the Bank’s prediction for the CPI in July was 9.9%, which was 0.2 percentage points lower than the actual figure.
The difference, according to Pantheon Macroeconomics’ chief UK economist Samuel Tombs, is primarily the result of rising food prices.
The ONS reported that prices for food and non-alcoholic drinks grew by 12.7%, the largest increase since August 2008 and up from 9.8% the previous month.
All of the 11 food and non-alcoholic beverage categories that statisticians study saw price increases in July.
Cereals, milk, cheese, and eggs, as well as bread and cereal, had the most effects on inflation.
According to the ONS, the cost of store-bought milk, cheddar, and yoghurt “rose significantly.”
There were also minor effects from increased prices for vegetables, sugar, jam, cooked ham, and bacon, among other things.
“These data emphasise the enormity of the cost-of-living issue and make obvious that millions of people face a grave financial scenario in the months ahead,” said Rocio Concha, director of policy and advocacy at Which?
It is obvious that the existing level of government assistance for cost of living would not be enough since costs are expected to increase further.
“Ministers must act quickly to increase the amount of assistance for those who are struggling, and businesses in essential sectors, such as supermarkets, energy, and telecoms, must also do everything they can to ensure customers are getting a good deal and extra assistance if they need it,” the statement reads.
Spending on credit cards has increased by 30% as more individuals resort to borrowing money due to the cost-of-living crisis.
According to official data from trade group UK Finance, UK credit card users spent just under £20 billion in May, a 33% increase in overall spending from the same month last year.
Debt was also rising, with credit card account balances increasing by over 10% in the year up to May.
With almost 357 million payments made in May by UK cardholders both domestically and abroad, the number of credit card transactions increased by more than a quarter compared to the same month last year.
Inflation measured by the Consumer Price Index has climbed to 7.9 percent in the year before to May.
Since the beginning of the year, there has been a steady rise in credit card usage, which has coincided with rising bill prices and double-digit food and beverage inflation.
According to UK Finance, overall debit card spending increased by just 1% from the same time last year.
Mr. Sunak claimed that Ms. Truss’s proposals to cut taxes to aid families in navigating the cost of living crisis would be worth “precisely zero” to retirees during last night’s brutal blue-on-blue brawls at the Tory leadership hustings.
According to him, her proposals would only be worth “a quid a week” to someone making the federal minimum wage.
To aid struggling families, Ms. Truss has promised to rescind the national insurance increase, though she hasn’t ruled out providing additional assistance.
But according to Mr. Sunak, direct assistance is the best way to assist those who have higher energy costs.
“The tax savings Liz is proposing are worth around £1,700 to someone on her salary,” he said during the hustings. It’s worth around a pound a week for someone working really hard for the national living wage.
It’s evident that Nicola Sturgeon isn’t Scotland’s only attention seeker, a source for the Truss campaign retorted. It’s unfortunate that Sunak had to go to such lengths to get attention.
As a new wave of industrial unrest starts, unions have warned that the cost-of-living issue has turned into a “living nightmare” for employees.
According to Sharon Graham, general secretary of Unite, inflation has reached “new dangerous levels” for workers and their families.
The numbers from today show that salaries are not the main cause of inflation, despite the fact that real earnings plummeted to their lowest level ever recorded yesterday.
The FTSE top 350 has witnessed a 43% increase in earnings since the outbreak. When will anything be done about the profiteering situation in Britain?
According to Jon Richards, assistant general secretary of Unison, the cost-of-living crisis has turned into a reality for millions of workers.
The Government and those vying to become the next prime minister seem insensitive to the hardship of people battling to make ends meet, even though wages are falling at a record pace and costs and bills are rising.
If ministers believe that workers can put up with even more suffering, they are deluded. Pay raises above inflation are necessary to save struggling families.
Families are in a cost-of-living emergency, according to TUC general secretary Frances O’Grady. Ministers must stop the disastrous increase in energy prices this fall, and they should put public ownership of energy retail in place to ease inflationary pressures in the future and lower the cost of energy.
The government should advance increases to universal credit and the national minimum wage in order to assist people with the cost of living this winter.
“Companies that received government funding during the epidemic must also volunteer to assist.” They need to prioritise worker pay raises above their own and use profit restriction to keep costs down.
Several economic sectors are experiencing industrial conflicts, and unions are seeking to negotiate wage increases that are close to inflation.
On Thursday, new rail strikes will begin. The following week, employees at BT, Royal Mail, and the Post Office will go on strike. Additionally, nurses and other health care workers will begin voting on wage strike options.