The U.K. hits record highs in both heat and inflation
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Amid rising fuel and food prices, the U.K.’s consumer price index (CPI) rose 9.4 percent in the 12 months through June, hitting a 40-year-high, according to official statistics.
Every month, the country’s CPI rose 0.8% in June 2022 compared with a 0.5% increase in June 2021, according to the Office for National Statistics (ONS). The increase in annual inflation was driven by higher fuel and food prices, which were only slightly offset by lower prices for used cars, said Grant Fitzner, chief economist at the ONS.
The annual increase for transportation was 15.2% in June 2022 versus a -1.5% increase in June 2020 during the first COVID-19-related containment.
Transportation is affected, and the price of motor fuels soared by 42.3% year on year. According to the ONS, food and non-alcoholic beverage prices climbed 9.8% over 2021-2022, the largest increase since March 2009.
The British central bank expects inflation to exceed 11% in October due to a widely anticipated sharp rise in energy price caps.
To combat inflation, the Bank of England has raised its benchmark interest rate to 1.25%, its highest level since 2009. Governor Andrew Bailey recently stated that “our commitment is unconditional” to the 2% inflation target and that “a 50 basis point increase will be on the table at our next meeting” in August.