Fuel and food prices have tightened the screws on struggling families, driving UK inflation to a new 40-year high.
In June, the headline CPI rate increased from the previous month’s 9.1% to an alarming 9.4%.
The gain exceeded analysts’ expectations by a wide margin and marks the highest level since February 1982.
The Bank of England has signalled that it may raise interest rates by another 0.5 percentage points to 1.75 percent next month in order to counteract rising prices, which will only make things worse for people.
When the cap on energy prices is set to climb once more in the fall, the CPI rate is expected to soar to about 11%.
The Bank’s goal for inflation is a meagre 2%, and the new Chancellor, Nadhim Zahawi, has warned that public sector pay must be constrained to help avoid a dangerous spiral.
According to Grant Fitzner, the ONS’s senior economist, “Annual inflation again climbed to stand at its highest rate in over 40 years.”
The increase was mostly caused by rising food and fuel costs, which were only somewhat mitigated by declining used car prices.
“Higher metal and food costs, respectively, drove the cost of both raw materials and finished items leaving manufacturers.
“These gains saw manufactured products reach a 45-year high, with raw materials posting their largest yearly increase on record.”
“We are working alongside the Bank of England to bear down on inflation,” said Chancellor Nadhim Zahawi.
“Countries around the world are battling higher costs and I know how difficult that is for individuals right here in the UK.
“We’ve introduced £37 billion worth of help for households, including at least £1,200 for 8 million of the most disadvantaged families and lifting over 2 million more of the lowest paid out of paying personal tax,” the statement reads.
However, according to Sharon Graham, general secretary of Unite, “Workers have experienced years-long spring, summer, autumn, and winters of discontent.”
Inflation is at record levels right now, just like temperatures are.
In the last 20 years, the average wage has been declining at the fastest rate. Unite will not merely watch as employees suffer the consequences of a crisis that was not their fault.
The inflation data, according to shadow chancellor Rachel Reeves, demonstrated the need for more than simply “sticking plasters” to repair the economy.
Families are growing more concerned about the cost of living problem every day, but all we get from the Tories is turmoil, diversion, and underfunded fantasy economics, she claimed.
“Rising inflation may be straining family budgets, but the low-wage spiral that so many people in Britain are experiencing is not new.”
Living standards and real earnings have not increased as a result of a decade of Tory mismanagement of our economy, according to the statement.
The Confederation of British Industry’s Anna Leach, deputy chief economist, issued a warning that inflation was expected to continue high for the remainder of the year, “severely cutting into squeezed household finances.”
The statistics, she said, “underscore the need to offer individuals greater control over their energy bills: through accelerating decisions for power infrastructure and establishing a national campaign to aid households in improving their homes’ insulation.”
“But the Government needs to concentrate on increasing the economy’s supply potential to build resilience to price shocks over the longer run.
The establishment of green infrastructure and encouraging investment with a permanent replacement for the super deduction are essential first steps.
This comes after the Bank of England hinted yesterday night at the sharpest increase in interest rates in over 30 years.
The Bank’s monetary policy committee will convene in two weeks and, according to Governor Andrew Bailey, will discuss raising the interest rate by 0.5 percentage points to combat the inflation crisis.
Rates would reach 1.75 percent, the highest level since December 2008, and represent the largest increase since 1995.
Mr. Bailey stated that if the Bank discovered evidence of inflation ingrained in the economy, it would “act decisively.”