The rate of Consumer Price Index (CPI) inflation rose from 9.4 percent, hitting double digits for the first time in 40 years. Overall, inflation jumped by 0.6 percent in July 2022 on a monthly basis, compared with no change in July 2021. An increase in food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between June and July 2022.
Chancellor of the Exchequer 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 £37billion 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.”
This increase to the inflation rate means further action by the Bank of England to safeguard peoples’ savings may be likely.
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The central bank’s Monetary Policy Committee (MPC) recently hiked the base to 1.75 percent in an attempt to address inflation.
Experts believe another 0.50 percent rise to interest rates is likely to boost savings, however homeowners and those in debt will likely lose out.
Scott Gallacher, a chartered financial planner at Rowley Turton, explained: “Despite the recent rate rises, because of higher inflation, savers are arguably in a worse position than they were a couple of years ago.
“This is because ‘real’ savings rates are even lower. That said, the higher rates do at least make shopping around worthwhile.”
Steven Cameron, the pensions Director at Aegon, warned that inflation has become a “flashing red threat” to millions of people across the country.
“The further increase to 10.1 percent from 9.4 percent last month means we are now into double digits, with rises expected to skyrocket further to 13 percent later this year,” Mr Cameron said.
“Put another way, your £10 last year is worth £9 today. With the final destination of energy prices unknown, the big question is how and to what extent the Government can support individuals facing further massive energy cap hikes.”
These latest inflation figures from the Office for National Statistics (ONS) come after yesterday’s revelation that year on year increases in average regular earnings have slowed down to 4.7 percent, well below the new rate.
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Experts are sounding the alarm that inflation at 10.1 percent is a “bleak picture” for households across the country.
Richard Eagling, a personal finance expert at NerdWallet, said: “Today’s inflation figures paint a bleak picture for millions of households across the UK, who will see their financial wellbeing further squeezed.
“Everyone will be impacted by the latest jump, but it will affect people in very different ways depending on their financial circumstances, commitments and lifestyles.
“Ultimately, each household or individual should do all they can to take control of their finances, make sound decisions on how they are managing their money, and find the best possible methods of dealing with the cost-of-living crisis.”
On the inflation rate, Laura Suter, the head of personal finance at AJ Bell, said: “The usual culprits of energy bills, mortgage costs and food prices all took the figure up, with prices now rising at five times the rate they were this time last year.
“The eye-watering increase in the price of food in July will be dismal reading for many families already struggling to pay for their supermarket shop.
“Food inflation reached 12.7 percent in July, having seen the highest monthly growth in more than 20 years. And there’s no option of hunting out food that hasn’t risen in price, as costs went up in every category the ONS records, with dairy, bread and cereals seeing the biggest uptick.
“We’ve seen swathes of shoppers switching to discount supermarkets or trading down from branded products to own brands, and that will accelerate as food prices continue their climb upwards.”