The UK inflation rate jumped in July to 10.1% year-on-year, a 40-year high, mainly driven by food price hikes, deepening a cost-of-living crisis that is already serious in the country, according to the National Statistics Office (ONS) announced on Wednesday.
Price increases were widespread last month, but “food in particular increased, especially bakery, dairy, meat and vegetables” but also “food to go,” Grant Fitzner, chief economist at the ONS. Inflation was already at 9.4% year-on-year in June, and price increases could exceed 13% in October, when drastic increases in energy prices are expected, which are also skyrocketing, according to forecasts by the Bank of England.
In July, price increases affected basic items such as pet food, toilet paper, toothbrushes and other deodorants, but also amid school vacations, holidays and air travel, according to the ONS. The cost of raw materials and goods leaving factories also continued to rise.
Real wages fall 3%
Inflation is melting the purchasing power of the British at a record speed, with real wages, that is to say adjusted after price increases, which have lost 3% for the three months ending at the end of June, the ONS had announced this Tuesday. . The consequences are already being felt in the economy: the British gross domestic product (GDP) contracted by 0.1% in the second quarter, before a probable entry into recession at the end of the year.
“I understand that times are tough and people are worried about the price increases that countries around the world are facing,” Finance Minister Nadhim Zahawi said, highlighting the £37bn support package already announced. by the government.
But many voices are calling for much more to be done in the face of historic price rises, criticizing the executive’s inaction amid the Conservatives’ campaign to elect the successor to resigned Prime Minister Boris Johnson. The Bank of England, which has already raised interest rates several times since 2021 in a bid to quell inflation, announced in early August a half percentage point hike in its benchmark rates, the biggest rise since 1995. The scope and magnitude of inflation puts additional pressure on the Bank of England” to raise rates, says KPMG economist Yael Selfin.
Source: BFM TV
