Inflation in the UK hit double-digits last month as food, drinks and energy prices all jumped.
The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to July 2022, up from 9.4% in June.
Increases in groceries, electricity, gas and other fuels, transport and food and non-alcoholic beverages contributed to the latest figures said the Office for National Statistics (ONS).
The data will put further pressure on the Bank of England to raise interest rates to try and dampen the inflationary momentum.
Samuel Tombs at Pantheon Macroeconomics described today’s numbers as an “ugly print.”
The 10.1% rise was above both the consensus of 9.8% and the MPC’s 9.9% forecast in August’s Monetary Policy Report, he said.
Core CPI inflation rose to 6.2%, from 5.8%, also above the consensus of 5.9%.
Tombs noted the rise reflected increases in a wide range of components with food CPI inflation up to 12.6% (the highest rate since August 2008) from 9.8%. particularly noticeable.
But Tombs said: “The upside surprise relative to the MPC’s forecast was primarily accounted for by the surge in food prices, so July’s data shouldn’t make much difference to the near-term outlook for the bank rate.”
Tombs said he expects the headline rate of CPI inflation to fall a little in August and September, as the recent fall in oil prices gets passed on to consumers at the petrol pump.
Motor fuel’s contribution to the headline rate will be 0.5 percentage points smaller in September than in July if the Brent crude price remains near its current $92pb level.
But he cautioned the headline rate then will soar to around 13% in October when Ofgem will increase its default tariff price cap by about 80%.
Businesses under pressure
Chirag Shah, CEO and Founder of Nucleus Commercial Finance, commented: “Inflation continues to escalate, and with it, so does the challenge to UK SMEs.”
“The narrative is quite rightly dominated by the impact on households, but the plight of businesses demands attention too.”
“Not only are they seeing their overheads squeezed further, but they are also faced with the prospect of contracting demand as well. It’s a perfect storm.”
“UK businesses may be able to get by for a while by battening down the hatches, but that’s nothing more than a short-term strategy and all indicators suggest that this is not blowing over any time soon.”