Inflation hits 10.1% as cost of living continues to soar

Consumer Prices Index inflation (CPI) reached 10.1% last month, beating expectations, the Office for National Statistics (ONS) revealed.

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

(PA Graphics)

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

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

It is also a massive jump from the 9.4% inflation in June.

ONS chief economist Grant Fitzner 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.”

Inflation is expected to fall back a little in August; however, according to estimates it could soar to 13.3% in October when the energy price cap rises again.

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

According to the most recent estimates by experts the price cap will reach close to £3,640 in October, up from £1,971 at the moment.

Then energy prices are expected to rise even further, topping well above £5,000 next year – although these forecasts for further ahead are more unsure.

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.”

Rocio Concha, director of policy and advocacy at Which?, said: “These figures underline the scale of the cost-of-living crisis and make clear that millions of people face a dire financial situation in the months ahead.

“With bills set to rise further, it’s clear that the current level of cost-of-living government help will not be sufficient.

“Ministers must now move quickly to increase the amount of support for those who are struggling, and businesses in essential sectors, such as supermarkets, energy and telecoms, must also do everything they can to make sure customers are getting a good deal and extra support if they need it.”

Meanwhile, the official data showed that Retail Price Index (RPI) inflation reached 12.3% in July.

In the past this measure has been used to cap the following year’s price increases on some train tickets in England, Scotland and Wales. With inflation running away, the UK Government will keep the 2023 rises below RPI.

However, it did not reveal how it plans to calculate the rises.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.8% in July, up from 8.2%.