The consumer price index (CPI) inflation rate rose to 9.4%, reaching double digits for the first time in 40 years. Overall, inflation jumped 0.6% in July 2022 on a monthly basis, compared to no change in July 2021. An increase in food prices made the largest upward contribution to the change in annual HICP and CPI 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 the price increases 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 additional payments for those on the lowest incomes, pensioners and people with disabilities, and £400 off energy bills for everyone in the coming months.
“Taking inflation under control is my top priority, and we are taking action through strong and independent monetary policy, responsible tax and spending decisions, and reforms to boost productivity and growth.”
This increase in the rate of inflation means that further action by the Bank of England to protect people’s savings could be considered.
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The central bank’s Monetary Policy Committee (MPC) recently raised the base to 1.75% in a bid to fight inflation.
Experts say another 0.50% hike in interest rates should boost savings, but homeowners and those in debt are likely to lose out.
Scott Gallacher, Certified Financial Planner at Rowley Turton, explained: “Despite recent rate hikes, due to rising inflation, savers are arguably in a worse position than they were a few years ago.
“That’s because ‘real’ savings rates are even lower. That said, the higher rates at least make shopping worthwhile.”
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Steven Cameron, director of pensions at Aegon, warned that inflation had become a “flashing red menace” for millions of people across the country.
“The further increase to 10.1% from 9.4% last month means we are now in double digits, with increases set to soar further to 13% later this year,” Mr Cameron said. .
“In other words, 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 people. faced with further massive increases in the energy cap.
These latest inflation figures from the Office for National Statistics (ONS) come after yesterday’s revelation that annual increases in average regular earnings have slowed to 4.7%, well below the new rate.
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Experts are sounding the alarm that inflation at 10.1% is a “gloomy picture” for households across the country.
Richard Eagling, personal finance expert at NerdWallet, said: ‘Today’s inflation figures paint a grim picture for millions of households across the UK, who will see their financial wellbeing further reduced. .
“Everyone will be affected by the last jump, but it will affect people very differently depending on their financial situation, commitments and lifestyle.
“Ultimately, every household or individual should do whatever they can to take control of their finances, make wise decisions about how they manage their money, and find the best possible methods to deal with the crisis. cost of living.”
On the inflation rate, Laura Suter, head of personal finance at AJ Bell, said: “The usual culprits of energy bills, mortgage costs and food prices have all pushed the figure up, with prices now rising at five times the rate they were this time last year.
“July’s skyrocketing food prices will be dismal reading for many families who are already struggling to pay for their supermarket.
“Food inflation hit 12.7% in July, after seeing the strongest monthly growth in over 20 years. And there’s no option to hunt for food that hasn’t gone up in price, because Costs rose across all categories recorded by the ONS, with dairy, bread and cereals seeing the biggest rise.
“We have seen many shoppers switch to discount supermarkets or switch from branded to own brand products, and this will accelerate as food prices continue to climb.”