Consumer price inflation jumped to 10.1 percent in July, its highest since February 1982, up from an annual rate of 9.4 percent in June, intensifying the squeeze on households, official figures showed on Wednesday.
The figure was higher than economists expected, with rising food prices making the biggest contribution. Energy, petrol and diesel costs are also contributing.
According to the ONS, food and non-alcoholic drinks were the largest contributor to rising prices in July. The price of bread, cereals, milk, cheese and eggs rose the fastest, while the cost of vegetables, meat and chocolate were also higher.
Prices also rose for other staples, such as toilet rolls, pet food and toothbrushes. Transport costs were another big contributing factor, with air fares and international rail tickets particularly increasing. The price for package holidays also went up, as demand increased.
The increase was above all economists’ forecasts in a Reuters poll for inflation to rise to 9.8 percent in July, and will do nothing to ease the Bank of England’s concerns that price pressures may become entrenched.
Despite warning that a recession was likely, the BoE earlier this month raised its key interest rate by 0.5 percent to 1.75 percent – its first half-point rise since 1995. The Bank of England has said inflation – the rate at which prices rise – could peak at more than 13 percent.
Wednesday’s figures from the Office for National Statistics showed that prices rose 0.6 percent in July from June on a non-seasonally adjusted basis. The annual rate of retail price inflation hit 12.3 percent, its highest since March 1981.
Britain is not alone in facing soaring price growth but there are signs it will continue to struggle with rising inflation for longer than other countries.
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