LONDON — Inflation in Britain rose to a new 40-year high of 10.1% in July as rising food prices sharpened the cost of living fueled by rising energy prices.
The Office for National Statistics said on Wednesday that consumer price inflation hit double digits, a jump of 9.4% in June and higher than analysts’ central forecast of 9.8%. The increase was largely due to rising prices for food and staples, including toilet paper and toothbrushes, it said.
Most economists believe the worst is yet to come. The Bank of England says rising natural gas prices are likely to push consumer price inflation to 13.3% in October. It says this will push Britain into a recession expected to last until 2023.
That pressure prompted the bank’s Monetary Policy Committee to raise its key rate by 0.5 percentage points this month, the largest of six consecutive hikes since December. The percentage now stands at 1.75%, the highest since the low point of the global financial crisis in late 2008.
“We expect another 50 bps (bps) rate hike in September,” said James Smith, developed markets economist and ING Economics. “We are not ruling out a new walk in November.”
Inflation is rising in many countries as Russia cuts natural gas supplies to Europe in retaliation for the West’s support for Ukraine. This has led to unprecedented increases in energy prices worldwide.
“I understand that times are tough and people are concerned about price increases that countries around the world are facing,” said Nadhim Zahawi, head of the UK’s treasury.
“While there are no easy solutions, we help where we can,” he said, including a £400 ($483) payment to households facing sky-high utility bills.
Britain’s Conservative government is under pressure to do even more to help people cope with the cost of living crisis. The average household fuel bill in the UK is up more than 50% this year, and in October the average bill is expected to be £3,500 ($4,300) a year.
Copyright 2022 ABC NEWS. All rights reserved.
Follow WT LOCAL on Social Media for the Latest News and Updates.
Share this news on your Facebook,Twitter and Whatsapp.