UK Inflation Hits Double Digits For The First Time In 40 Years

UK inflation rose to a 40-year high of 10.1 percent as households grapple with cost of living crisis.

Gatekeepers News reports that this is the first time the Consumer Prices Index (CPI) has hit double digits since February 1982, when it reached 10.2 percent.

The CPI was at 9.4 percent as of June but Wednesday’s figures show it rose to 10.1 percent in the 12 months to July, according to the Office for National Statistics (ONS).

There was an overall increase of 2.3 per cent between June and July 2022 in food and non-alcoholic drinks.

Rising food prices made the biggest contribution to the month’s increase, indicating inflationary pressures are spreading beyond energy.

“Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices,” said Grant Fitzner, chief economist at the ONS.

“Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July.”

The figures add to a cost-of-living crisis, with wages falling further behind rising prices for goods and services of all kinds.

Separate figures showed pipeline price pressures appeared to be easing, with fuel and raw material prices rising just 0.1 percent in July, the smallest monthly increase since December. That was mainly due to a drop in crude oil prices during the month. It still left input prices up 22.6 percent on the year, only slightly below the record pace recorded in June.

Output prices rose 1.6 percent on the month and by 17.1 percent from a year earlier, the largest annual gain since 1977.

“The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively,” Fitzner said.

Another measure of inflation used to set rail fares and payouts on index-linked government bonds registered the strongest jump since 1981. The Retail Prices Index increased rose 12.3 percent from a year ago, up from 11.9 percent the month before.

Real wages adjusted for inflation fell 3 percent in three months though June, the sharpest pace since records began in 2001, a official data published Tuesday showed. Employment increased by 160,000 in the second quarter, 46 percent less than the three months through May, and job vacancies fell for the first time since August 2020.

The Bank of England predicted inflation will hit 13 per cent later this year when the energy price cap is reviewed, with average energy bills forecast to reach £4,200 in 2023.