Inflation has risen steadily over the past nine months, with the Bank of England expecting a peak of 11%
UK inflation has risen to its highest level in 40 years, reaching 9.4% in June.
Rising prices are wreaking havoc as the cost of living crisis continues to squeeze households and businesses.
ONS chief economist Grant Fitzner said: “Annual inflation rose again to the highest level in over 40 years.”
Inflation has been rising steadily over the past nine months and the Bank of England expects it to peak at 11% by the autumn.
Speaking to BBC Breakfast, the government admitted the current situation was “challenging” but blamed the war in Ukraine for “taking a toll here at home”.
The news comes after the government announced a below-inflation pay rise for public sector workers, which is expected to spark strikes.
Here’s everything you need to know about why inflation is so high and when it will come down.
What is the current UK inflation rate?
The current inflation rate in the UK is 9.4%.
This is the highest rate the UK has recorded in 40 years.
ONS Chief Economist Grant Fitzner explained: “The rise was driven by rising fuel and food prices, only marginally offset by falling used car prices.”
The last time inflation was above 9% was in 1981 when it reached 9.1.
Why is inflation so high?
The inflation rate started to increase in 2021 after the Covid-19 pandemic.
As countries around the world began to reopen, businesses struggled to meet the additional demand for goods and services.
Due to a production gap, access to materials was a challenge and many companies suffered from shortages.
Russia’s invasion of Ukraine in February 2022 only exacerbated the situation by driving up gas, oil and petrol prices.
Ukraine is also a major player in the global agricultural sector as it is one of the largest grain producers.
The shortage of grain has caused food prices to skyrocket and also led to food shortages.
As a result, companies have had to charge more for their products, putting pressure on UK households.
When will inflation come?
The Bank of England forecasts that inflation will fall in 2023.
If everything goes as expected, the inflation rate will be close to 2% in two years.
However, this is not helpful for households currently struggling with inflation.
Discussing the impact of inflation, Labor Shadow Chancellor Rachel Reeves blamed the struggles facing budgets on the Conservative government and commented on below-inflation wage rise proposals.
Reeves said: “Rising inflation may be threatening family finances, but the low-wage spiral faced by so many in Britain is not new.
“It is the result of a decade of Tory mismanagement of our economy, which means living standards and real wages have not grown.”
What are the inflation forecasts for 2022?
The Bank of England has forecast that inflation will continue to rise in 2022, peaking at 11%.
In the coming months, households will come under further pressure as the cost of living continues to rise.
On inflation, Chancellor Nadhim Zahawi said: “Countries around the world are fighting higher prices and I know how difficult this is for people here in the UK, so we are working with the Bank of England to curb inflation.
“We have provided aid for households worth 37 billion euros.
But there have been calls for the government to step in, with Labor’s Annelise Dodds calling for “urgent action”.
Speaking to BBC Breakfast, she said: “We must act immediately. The government should deduct VAT from energy bills.
“We could take action now to lower people’s bills.”