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British consumer price inflation rose to 10.1% in July, its highest level since February 1982, up from an annual rate of 9.4% in June, official data showed, further tightening the squeeze on consumers.
The rise from June’s annual rate of 9.4% was higher than all economists’ predictions in a Reuters poll, which encouraged investor expectations that the Bank of England will continue swiftly raising interest rates.
Price rises in staple items pushed up inflation in July
“Food prices rose notably, particularly bakery products, dairy, meat, and vegetables, which was also reflected in higher takeaway prices,” states Grant Fitzner, chief economist at the ONS. “Price rises in other staple items, such as pet food, toilet rolls, toothbrushes, and deodorants also pushed up inflation in July.”
According to data that will be made public on Thursday by the statistics office of the European Union, the annual rate of inflation in the eurozone increased to 8.9% in July from 8.6% in June. Contrarily, U.S. inflation decreased from 9.1% in June to 8.5% in July.
The prices of food and many other commodities have decreased from recent heights, which is evidence, according to JPMorgan economists, that global inflation is about to subside. Despite some recent lowering in the pricing of products exiting factory gates, they anticipate that disinflation will become apparent first in the U.S. and lag behind in Europe.
Also Read: Biden signs the Inflation Reduction Act, 2022
Britain is not alone in facing soaring price growth
Britain is not alone in facing soaring price growth but it is the first in the Group of Seven economies to experience inflation above 10%.
There are indications that it will face growing inflation for a longer period of time than other economies, especially its European counterparts, where energy costs have skyrocketed as a result of Russia’s invasion of Ukraine.
As a result of increased cost pressures, economists are becoming more gloomy about the UK economy and believe that a recession is now far more likely than not. The BOE anticipates a recession to begin in the fourth quarter and persist until the first few months of 2024.
The central bank anticipates inflation to exceed 13%
Later this year, when regulators permit energy prices to increase once more, the central bank anticipates inflation to exceed 13%. That would be the lowest reading since September 1980, when Margaret Thatcher’s administration was battling to halt a wage-price rise.
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