UK inflation hits 10.1% in new 40-year high as cost of living crisis continues to soar

The cost of living soared again in July with Britain’s inflation rate reaching a new 40-year high, putting further strain on families across the UK.

The Consumer Prices Index inflation (CPI) reached 10.1% last month, up from 9.4% in June, the Office for National Statistics (ONS) has revealed.

It marks the biggest jump in the cost of living since February 1982, when CPI reached 10.4%, according to ONS estimates.

July’s inflation rate is higher than the 9.8% figure expected by most economists.

Inflation is expected to fall back a little in August, although it is estimated that it could go up again to 13.3% in October when the energy price cap rises.

The Bank of England believes this could push the UK into a recession.

Why has inflation soared?

The measure had been expected to reach 9.8%, according to an average of analysts’ estimates calculated by Pantheon Macroeconomics.

The increase was largely down to food prices and staples including toilet rolls and toothbrushes, according to the ONS.

Grant Fitzner, ONS chief economist, said: “A wide range of price rises drove inflation up again this month.

“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.

“Driven by higher demand, the price for package holidays rose, after falling at the same time last year, while air fares also increased.

“The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively.”

‘Times are tough’

The rise in inflation comes after separate data released on Tuesday (16 August) showed workers had suffered a record real-term pay slump as prices sky-rocketed.

The latest inflation figure will ramp up further pressure on the government to take action in tackling the cost of living crisis.

Responding to the rise, Chancellor Nadhim Zahawi said: “I understand that times are tough, and people are worried about increases in prices that countries around the world are facing.

“Although there are no easy solutions, we are helping where we can through a £37 billion support package, with further payments for those on the lowest incomes, pensioners and the disabled, and £400 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.”