[ad_1]
Liz Truss and Rushi Sunak during The Sun Showdown: The Fight for No 10, the latest debate for the Conservative Party leadership candidates. The next prime minister will be forced to confront the historic cost of living crisis as food and energy prices rise and real incomes fall.
Dominic Lipinski | Pa Images | Getty Images
LONDON – UK inflation rose to a 40-year high in July as rising food and energy prices intensified the country’s historic squeeze on households.
The consumer price index rose 10.1% year-on-year, according to estimates published by the Office for National Statistics on Wednesday, above the Reuters consensus estimate of 9.8% and up from 9.4% in June.
Core inflation, which excludes energy, food, alcohol and tobacco, came in at 6.2% in the year to July 2022, up from 5.8% in June and ahead of estimates of 5.9%.
British 2-year gilt yield After the release, it rose on Wednesday morning, adding more than 26 basis points to 2.41%, its highest point since November 2008.
The ONS said in its report that the annual inflation rate between June and July was driven by food price rises.
“Supermarkets have no choice but to pass on price increases to suppliers, themselves struggling with unprecedented inflation in raw material and ingredient input costs,” said Kien Tan, director of retail strategy at PwC.
“This is particularly acute in labour- and utility-intensive categories such as dairy, with reports of the price of a pint of milk in some stores more than doubling since the start of the year.”
The ONS reiterated that its indicative model-based consumer price inflation estimates “suggest that the CPI rate will remain high around 1982, with estimates falling from around 11% in January to around 6.5% in December.”
The Bank of England has implemented six consecutive increases in interest rates as it reins in inflation, and earlier this month launched the biggest single increase since 1995 when it predicted the UK would enter its longest recession since the global financial crisis in the fourth quarter. is of the year.
The bank expects inflation to peak at 13.3% in October. Conservative Party leadership candidates Liz Truss and Rishi Sunak, one of whom will succeed Boris Johnson as prime minister on September 5 after a vote by party members, are under increasing pressure to offer radical solutions to the country’s historic cost-of-living crisis.
The latest forecasts suggest the UK’s energy price cap could rise from its current £1,971 to £4,266 ($5,170) a year as early as next year, with many households already choosing between heating and eating. The cap is expected to rise to more than £3,000 in October following the next review.
Real wages in the UK fell by an annual 3% in the second quarter of 2022, the steepest fall on record, according to ONS data published on Tuesday.
Although average wages rose by 4.7% excluding bonuses, the cost of living suppressed wage growth and household incomes.
“Today’s inflation figures serve as a further reminder to many UK households that they are facing significant financial difficulties,” said Dan Howe, head of investment trusts at Janus Henderson.
“Consumers are already grappling with rising energy costs and rising household prices, all compounded by a lack of decisive action at political level. Amidst talk of strikes and energy blackouts, there is no doubt that UK households face tough decisions ahead.”
Richard Carter, head of fixed interest research at Quilter Cheviot, predicted the Bank of England would respond with another 50 basis point interest rate hike to tackle inflation at its next monetary policy meeting, saying there was no doubt. The cost-of-living crisis is going to get worse before it gets better.
“Thus, there will no doubt be a lot of pressure on the next prime minister to help soften the blow and the Bank of England will continue to have a very difficult job on its hands,” he added.
[ad_2]
Source link
