The latest inflation figures are here and don’t make for reassuring reading.
According to the Office for National Statistics, the Consumer Prices Index (CPI) measure of price inflation rose by 9.4% in the twelve months to June.
CPI rose from 9.1% a month earlier, reaching its highest level for more than 40 years.
Higher petrol and food prices drove the inflation measure higher last month.
The Bank of England has already forecast that CPI inflation could reach 11% later this year, despite the central bank’s 2% inflation target.
Driving inflation higher is soaring fuel prices, with the Russian invasion of Ukraine and subsequent moves across Europe to reduce dependence on Russian oil.
While wholesale fuel prices have fallen in recent days, they remain higher than before the onset of the invasion.
Grant Fitzner, chief economist at the ONS, explained that higher inflation in June was driven by “rising fuel and food prices”, saying:
“Annual inflation again rose to stand at its highest rate for over 40 years. The increase was driven by rising fuel and food prices, these were only slightly offset by falling second-hand car prices.
“The cost of both raw materials and goods leaving factories continued to rise, driven by higher metal and food prices respectively. These increases saw raw materials post their highest annual increase on record, with manufactured goods at a 45-year high.”
Chancellor Nadhim Zahawi said:
“Countries around the world are battling higher prices and I know how difficult that is for people right here in the UK, so we are working alongside the Bank of England to bear down on inflation.
“We’ve introduced £37 billion worth of help for households, including at least £1,200 for eight million of the most vulnerable families and lifting over two million more of the lowest paid out of paying personal tax.”
Anna Leach, CBI Deputy Chief Economist, said:
“Inflation hit another multi-decade high in June. The labour market is still tight, global price pressures strong and another rise in Ofgem’s energy price cap is in the offing. As a result, inflation is likely to stay high for the rest of this year, severely eating into strained household incomes.
“This data underscores the need to give people more control over their energy bills: through speeding up planning decisions for electricity infrastructure and creating a national effort to help households better insulate their homes.
“But to build resilience to price shocks over the longer-term, the government needs to focus on boosting the economy’s supply potential. Incentivising investment through a permanent successor to the super deduction and supporting the development of green infrastructure are crucial first steps.”