Title: UK inflation hits double digits, highest since 1982

Aug 17, 2022 02:52AM ET

By: AnalysisWatch

UK consumer price inflation jumped to 10.1% in July, the highest since February 1982, from 9.4% year-on-year in June, adding to pressure on households, official data showed on Wednesday.

The increase exceeded all economists' forecasts, which in a Reuters poll predicted inflation would rise to 9.8 percent in July, and will do nothing to alleviate the Bank of England's concerns that price pressures will worsen.

Earlier this month, the Bank of England raised its key interest rate by 0.5% to 1.75% the first half-point rise since 1995 and forecast inflation would peak at 13.3% in October, when administered household energy prices are due to rise.

The figures from the Office for National Statistics on Wednesday showed prices rose 0.6 per cent in July from June on a seasonally unadjusted basis, and the annual rate of retail price inflation reached 12.3 per cent, the highest since March 1981.

According to the BoE, rising energy prices in Europe following Russia's invasion of Ukraine are the main driver of inflation and are likely to lead the UK into a prolonged, albeit mild, recession later this year.

However, data suggests that future inflationary pressures may start to ease.

Although prices charged by factories rose by the most since August 1977, jumping 17.1%, the increase in prices paid by factories cooled slightly, falling to 22.6% year-on-year from a record 24.1% in June.

In monthly terms, producer prices rose just 0.1%, the slowest increase so far in 2022, partly due to weaker global demand for steel as world economic growth slows and falling crude oil prices.