UK inflation soars to fresh 40-year high as energy prices rocket

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This is still the highest level since February 1982 and puts an additional burden on budget-strapped households and companies.

Inflation in the UK has risen to a new 40-year high (Photo: Getty Images)

What caused inflation to rise?

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The rise in inflation was driven by rising fuel and food prices, ONS data shows, only slightly offset by falling used car prices.

The ONS said motor fuel costs rose 42.3% in the 12 months to June, the biggest jump on record.

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Average petrol prices last month were 184p a liter, up 18.1p since May alone, while diesel rose 12.7p to 192.4p, also a record.

Brits are also being hit by sharply higher food bills, with food and non-alcoholic drink prices rising 9.8% in the year to June 2022 – the highest rate since March 2009.

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Grocery prices rose 1.2% mom in June, following similar increases in April and May as higher cost pressures and the impact of the Ukraine war seeped through to supermarket shelves.

The biggest upside came from essential items like milk, cheese and eggs, according to the ONS, but there were also big increases in prices for vegetables, meat and other groceries like ready meals.

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Add to that huge hikes in gas and electricity tariffs, with annual inflation at a record 70.2% and more hikes to come.

The figures also show that the CPIH, which includes owner-occupier housing costs and is the ONS’ preferred inflation measure, rose 8.2% in June, up from 7.9% in May. Meanwhile, the retail price index (RPI) rose to 11.8% in June from 11.7% in May.

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Grant Fitzner, chief economist at the ONS, said: “Annual inflation rose again to its highest level in over 40 years.

“The increase was driven by rising fuel and food prices; these were only slightly offset by falling used car prices.”

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Newly appointed Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey have both pledged to bring inflation under control.

Mr Zahawi said: “Countries around the world are fighting higher prices and I know how difficult that is for people here in the UK, so we are working with the Bank of England to try to curb inflation.”

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Speaking in London on Tuesday evening (July 19), Mr Bailey said a stronger rate hike would be one of the options to be discussed at the next Bank of England policymakers meeting.

He said a 50 basis percentage point hike – which would take rates from 1.25% to 1.75% – was being considered as part of his pledge to “act with vigour” if inflation showed signs that it would enters the economy.

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The current cap of £1,971 is already a record beating the previous high by 54%, but the next period, which runs from October to December, is expected to rise to £2,980.

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