Annual consumer price inflation hit 10.1 percent in July, up from 9.4 percent in June, according to data released by the Office for National Statistics on Wednesday. Soaring food prices – up 12.7% since July 2021 – were the biggest contributor to the increase in inflation, the ONS said.
The inflation figure was higher than predicted by a Reuters poll of economists, and real wage inflation is now at a 14-year high.
“All 11 food and non-alcoholic beverage groups contributed more to the change in the annual inflation rate, where prices have generally increased this year but fell a year ago,” the ONS said.
The largest increases came from bread and cereals, and from milk, cheese and eggs, with notable increases in cheddar cheese and yogurt.
On a month-on-month basis, the consumer price index rose 0.6 percent in July, compared with a flat rate a year ago. The ONS adds that gasoline and diesel prices are higher, along with higher airfares.
Data released last week showed that the country’s GDP shrank 0.1% in the second quarter of this year.
‘Woe’ for consumers
And Tuesday’s official labor market report showed wages rose 4.7% between April and June, meaning median earnings fell 3% in the period after accounting for inflation. inflation – real wages fell the most since the ONS began holding the record more than 20 years ago.
“The situation is dire for UK consumers, who are currently being squeezed from all sides,” Kallum Pickering, senior economist at Berenberg, wrote in a note to clients. “Wages aren’t growing fast enough to offset rising inflation, but they’re growing too fast for [Bank of England’s] because it wants to get inflation back on target,” he added.
Inflation is forecast to be even higher later this year, driven by additional energy bills managed in October. Electricity prices rose 54% and gas prices rose 95.7% in the 12 months to July 2022 due to soaring wholesale costs, made worse by Russia’s invasion of Ukraine in late February.
UK government officials are said to be looking at options for more support for households. But Liz Truss, who leads the way to succeed Boris Johnson as the UK’s next prime minister in early September, has yet to offer a detailed plan beyond promising tax cuts.
The opposition Labor Party is calling for an extension of the wind tax on UK oil and gas companies to help fund the freezing of home heating bills this winter.
– Anna Cooban and Rob North contributed to this article.
