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Inflation in the UK continued to break records this week as it reached double digits for the first time in four decades.
The Consumer Prices Index (CPI) reached 10.1% in the year to July 2022, the UK’s Office for National Statistics (ONS) said today, up from 9.4% in June.
The largest contributor to the continued upswing in inflation was rising food prices, while increases in costs of housing and household services, such as electricity and gas bills and petrol also contributed, the ONS said.
The ONS said yesterday that UK wages fell in real terms, after accounting for inflation, by 3% in the second quarter of 2022.
The record-breaking inflation and real terms wage declines highlight the growing cost of living crisis faced by the country, with concerns that low-income residents will be unable to afford to heat their homes this winter.
A note from Daniel Richards, MENA economist at Emirates NBD, said industrial action on key services as well as trade disputes with the European Union post-Brexit meant the UK’s Bank of England will be wary of throttling growth as it looks to curb inflation.
“As such, the bank rate is set to remain below that of the US Federal Reserve and we see little that would significantly boost sterling in such a scenario, seeing 1.20 in Q3,” he said.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
