Annual consumer price inflation reached 10.1% in July, according to data published by the Office for National Statistics on Wednesday, up from 9.4% in June. Rising food prices – up 12.7% from July 2021 – are the biggest single contributor to the acceleration in inflation, the ONS said.
The headline inflation number was higher than a Reuters poll of economists had predicted, and food inflation is now at a 14-year high.
“All eleven food and alcoholic drink categories made upward contributions to the change in the annual rate of inflation, where prices overall rose this year but fell a year ago,” the ONS said.
Most upward contributions came from breads and cereals and milk, cheese and eggs, with significant price increases in cheddar cheese and yogurt.
On a monthly basis, the consumer price index rose 0.6% in July, unchanged from a year ago. Rising gasoline and diesel prices, as well as rising airfares, are also contributing factors, the ONS added.
Data published last week showed that the country’s GDP contracted by 0.1% in the second quarter of this year.
‘pathetic’ to customers
And Tuesday’s official labor market report found that wages rose by 4.7% between April and June, meaning average earnings fell by 3% after inflation is taken into account – the biggest fall in real wages since the ONS started keeping more than 20 records. Years ago.
“The situation is dire for UK consumers, who are currently being squeezed from all sides,” Callum Pickering, senior economist at Berenberg, wrote in a note to clients. “Wages are not rising fast enough to keep up with rising inflation, but they are rising too fast. [Bank of England’s] It wants to return inflation to target, he said.
Inflation is forecast to rise further later this year due to a further hike in regulated fuel bills in October. Electricity prices have already risen by 54% and gas prices by 95.7% in the 12 months to July 2022 as rocketing wholesale costs have been exacerbated by Russia’s invasion of Ukraine in late February.
UK government officials are reportedly examining options to provide more support to households. But Liz Truss, the front-runner to succeed Boris Johnson as the next UK prime minister in early September, has yet to outline a detailed plan beyond promised tax cuts.
The opposition Labor Party is calling for a windfall tax on UK oil and gas companies to be extended to help freeze household heating bills this winter.
— Anna Kuban and Rob North contributed to this article.