UK inflation rose to another 40-year high in July as spiralling food and energy prices continued to intensify the country’s historic squeeze on households.
The consumer price index in the UK rose 10.1% annually, according to estimates published by the Office for National Statistics on Wednesday, above a Reuters consensus forecast of 9.8% and up from 9.4% in June.
Core inflation, which excludes energy, food, alcohol and tobacco, came in at 6.2% in the year to July 2022, rising from 5.8% in June and ahead of projections of 5.9%.
Rising food prices made the largest upward contribution to annual inflation rates between June and July, the ONS said in its report.
The ONS repeated that its indicative modelled consumer price inflation estimates “suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December.”
The Bank of England has implemented six consecutive hikes to interest rates as it looks to rein in inflation and earlier this month launched its largest single increase since 1995 while projecting that the UK will enter its longest recession since the global financial crisis in the fourth quarter of the year.
The Bank expects inflation to top out at 13.3% in October. Conservative Party leadership candidates Liz Truss and Rishi Sunak, one of whom will succeed Boris Johnson as prime minister on Sept. 5 after a poll of party members, are under increasing pressure to offer radical solutions to the country’s historic cost-of-living crisis.
Richard Carter, head of fixed interest research at Quilter Cheviot, predicted that the Bank of England will likely respond at its next monetary policy meeting with yet another 50 basis point interest rate hike in a bid to combat inflation and said there is no doubt that the cost-of-living crisis is going to get worse before it gets better.
“As such, there will no doubt be a lot of pressure on the next Prime Minister to help soften the blow and the Bank of England will continue to have a very difficult job on its hands,” Richard Carter.
Read also; UK Inflation Reaches a 40-Year High of 9.4% as Food and Energy Prices Soar.
