UK inflation reaches 10.1% on soaring food, energy costs
Britain’s inflation rate rose to a new 40-year high of 10.1% in July, a faster pace than in the U.S. and Europe as climbing food prices in the United Kingdom tightened a cost-of-living squeeze fueled by the soaring cost of energy.
The double-digit surge in consumer prices over a year earlier was higher than analysts’ central forecast of 9.8% and a jump from the annual rate of 9.4% in June, the Office for National Statistics said yesterday.
The increase was largely due to rising prices for food and staples, including toilet paper and toothbrushes, it said.
Most economists believe worse is to come.
The Bank of England says soaring natural gas prices are likely to drive consumer price inflation to 13.3% in October. It says that will push Britain into a recession that is expected to last through 2023.
Those pressures persuaded the bank to boost its key interest rate by half a percentage point this month, the biggest of six consecutive increases since December.
The rate now stands at 1.75%, the highest since the depths of the global financial crisis in late 2008.
