Britain’s rate of inflation has surged to a new 40-year high as the Consumer Prices Index (CPI) rose to 10.1 per cent on Wednesday, with increasing food costs the biggest driver of the latest hike.
According to the Office for National Statistics (ONS), annual inflation for essential food items is now running at 12.7 per cent, up from 9.8 per cent in June, fuelled largely by price rises for basics such as bread, milk, cheese and eggs.
The latest figures come amid soaring energy bills and a mounting cost-of-living crisis across the country.
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“A wide range of price rises drove inflation up again this month,” said ONS chief economist Grant Fitzner.
“Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices. Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July,” he said.
“Driven by higher demand, the price for package holidays rose, after falling at the same time last year, while airfares also increased. The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively,” he added.
The latest inflation statistics will intensify pressure on the British government to take further targeted action to help struggling households.
However, Downing Street has said that outgoing Prime Minister Boris Johnson – who is on holiday in Greece – is not expected to announce any new policy initiatives and it will be down to his successor at 10 Downing Street to take action after September 5.
The issue has dominated the Conservative Party leadership election campaign, with former Chancellor Rishi Sunak focussing his pledges on inflation busting and targeted support for vulnerable families and Foreign Secretary Liz Truss stressing on tax cuts.
“I understand that times are tough, and people are worried about increases in prices that countries around the world are facing,” said Chancellor Nadhim Zahawi, responding to the inflation hike.
“Although there are no easy solutions, we are helping where we can through a 37 billion pounds support package, with further payments for those on the lowest incomes, pensioners and the disabled, and 400 pounds off energy bills for everyone in the coming months. Getting inflation under control is my top priority, and we are taking action through strong, independent monetary policy, responsible tax and spending decisions, and reforms to boost productivity and growth,” he said.
The latest inflation hike statistics follow separate data released on Tuesday showing workers in Britain had suffered a record real-term wage slump in the face of spiralling prices.
Millions of public sector employees are expected to vote on strike action over their pay in what is being predicted as the biggest wave of industrial action in the country since the 1970s. It comes in the wake of strike action by railway and postal workers.