Inflation hits DOUBLE DIGITS: CPI hits new 40-year high of 10.1% – above forecasts – Bank of England set to hike interest rates again as families have trouble making ends meet
- New figures show inflation hit a new 40-year high of 10.1% in July
- The level was above forecast and up from 9.4% the previous month
- Bank of England looks almost certain to raise interest rates again in September
Inflation soared to another 40-year high today as families struggle to make ends meet.
The headline CPI rate hit 10.1% in July, well above analysts’ forecast of 9.8%. It was up from 9.4% the previous month.
This is the highest figure since February 1982, when the measure was estimated at 10.4%.
But even that mark could be broken later in the year when the Bank of England expects the level to rise above 13%.
The latest increase – along with relatively robust labor market numbers yesterday – will bolster speculation that the Bank will raise interest rates again next month.
This could help curb soaring prices, but would also be more painful for Britons as wages lag far behind.
Chancellor Nadhim Zahawi admitted ‘times are tough’ but warned there were ‘no easy solutions’ and that getting inflation under control was his ‘top priority’.
The headline CPI rate hit 10.1% in July, well above analysts’ forecast of 9.8%. It was up from 9.4% the previous month
ONS chief economist Grant Fitzner said: ‘A wide range of price rises have pushed inflation up again this month. Food prices increased notably, especially bakery products, dairy products, meat and vegetables, which was also reflected in the rise in takeaway prices. Rising prices for other basic items, such as pet food, toilet rolls, toothbrushes and deodorants, also pushed up inflation in July.
“Driven by increased demand, the price of package holidays has risen, after falling at the same time last year, while air fares have also risen.
“The cost of raw materials and goods leaving the factories continued to rise, driven by the price of metals and food respectively.”
Mr Zahawi said: “I understand that times are tough and people are worried about the price increases that countries around the world are facing.”
“Although there are no easy solutions, we are helping where we can through a £37billion support package, with additional payments for those on the lowest incomes, pensioners and people with disabilities, and £400 off energy bills for everyone over the next few months.
“Taking inflation under control is my top priority, and we are taking action through strong and independent monetary policy, responsible tax and spending decisions, and reforms to boost productivity and growth.”
A separate measure of inflation typically used to determine annual train fare increases is due to be released by the ONS at 9.30am, and is expected to be even higher.
The retail price index (RPI) for July is expected to be around 12%, but the Department for Transport has already announced that the increase in regulated fares in England in 2023 will be below the measure of inflation.
Wales generally makes tariff changes similar to those in England, while the Scottish government has not announced its plan for next year.
The Bank of England expects CPI inflation to peak later this year at 13.3% as the UK heads into recession.
The energy price cap – which regulates what more than 20 million households pay for their gas and electricity – is set to rise again in October.
The cap is expected to be around £3,635 according to the latest forecast. That would be an 84% increase from today’s already record price cap.
Yesterday’s figures showed wages falling at a record rate against inflation