Inflation to UK jumped in July to 10.1% year on year, passing the symbolic bar of a double-digit price increase which promises to aggravate the crisis a little more cost of living. Feeding increased particularly in July. “Bakery, dairy, meat and vegetables”, but also “takeaway meals”, lists Grant Fitzner, chief economist of the National Statistics Office (ONS), on Twitter.
Inflation, which already reached 9.4% over one year in June, remains at its highest level in 40 years. It is accelerating faster than economists’ forecasts and could exceed 13% in October, the Bank of England predicts, when drastic increases in energy prices, which are also soaring, are due to come into effect for individuals.
Fall in real wages
As a result, the purchasing power of the British is melting at record speed, with real wages, that is, adjusted after price increases, which fell 3% for the three months to the end of June, according to figures released by the ONS on Tuesday. The economy is already taking a hit. Britain’s gross domestic product (GDP) contracted by 0.1% in the second quarter, before a probable entry into recession at the end of the year.
“I understand that times are tough and people are worried about the price increases that countries around the world are facing,” Finance Minister Nadhim Zahawi reacted, highlighting the 37 billion pound support package. (43.9 billion euros) already announced by the government. But from opposition to NGOs to businesses, many voices are calling for much more to be done for low-income households in the face of historic price increases.
And while purchasing power is at the heart of the Tories’ campaign to choose the successor to resigning Prime Minister Boris Johnson, critics are swelling over the executive’s inaction before the two finalists Liz Truss and Rishi Sunak were decided at the beginning of September.
“The cost of living crisis is now very real for households and businesses, so a concrete solution is needed to support the most vulnerable in the face of higher energy bills”, claims the employers’ union CBI in a press release.
The United Kingdom particularly affected
ONS data ‘indicates inflation has risen more sharply in the UK than in other G7 countries’ and ‘many consumers are already being forced to make tough choices’ to balance their budgets, says Susannah Streeter, of Hargreaves Lansdown.
By comparison, consumer price inflation in France accelerated in July to 6.1% year on year, while inflation slowed in the United States to 8.5%, figures show. released last week. Across the Channel, inflation was generalized last month, notes the ONS.
The Bank of England tries to limit damage
The cost of raw materials and goods leaving factories also continued to rise. The Bank of England, which has already raised its interest rates several times since 2021 in an attempt to calm inflation, announced in early August a hike in its key rate by half a percentage point, the largest increase since 1995.
“The extent and depth of inflation is putting additional pressure on the Bank of England” to continue hikes beyond its current rate of 1.75%, said KPMG economist Yael Selfin.