The first increase this year brings the inflation rate to 2.2% percent.
Statistics reveal that inflation in the United Kingdom has increased for the first time so far this year.
The 2.2% annual price increase met the Bank of England’s target and was somewhat higher than May’s 2%.
Gas and electricity prices have fallen less than they did a year ago, which is mainly responsible for anticipated increase.
Prices in the UK are increasing at a quicker rate currently than in prior months, according to the latest numbers. However this rate is lower than in 2022 and 2023, when increased energy and food costs hit consumers hard.
“While domestic energy costs did fall in July, the decline was smaller than a year ago,” said Grant Fitzner, chief economist at the Office for National Statistics (ONS).Hotel expenses, which saw rapid growth in June, declined in July, offsetting some of this.
Due to pandemic-related supply chain restrictions and the Ukraine crisis, inflation reached 11.1%, raising living costs for millions.
However, it had been declining continuously up until June, when the Bank of England raised interest rates to discourage spending.
Inflation will likely climb further this year before tumbling again, according to the Bank.
Businesses in UK will be relieved to hear this after years of struggling with rising rates, wage bills, and inflation.
“Products have gone up,” Livia Marrocco, owner of Marrocco’s restaurant and ice cream business in Hove, told the BBC. The cost of ingredients has become more expensive. Our prices have been raised somewhat.
She stated the great weather and school holidays have brought in more customers, improving things.
Inflation in services fell in July while food costs stayed the same, according to Mr. Fitzner, who also stated on Wednesday’s BBC Today show that “under the bonnet” price increases were under control.
“This still suggests that inflation pressures at least in the short run are fairly moderate,” according to him.
The Institute for Fiscal Studies found that between September 2021 and September 2023, food and drink prices increased by 28.4 percent.
The most recent data showed that lower-income families had a significantly larger increase in their food expense compared to higher-income families, since the biggest price hikes had been implemented for less expensive brands.
The Office for National Statistics (ONS) reports that food price inflation reduced to 1.5% in July.
Important service sector pricing increases, which include things like hotel stays, gym subscriptions, and auto repairs, have begun to trend downward.
Following June’s 5.7% and July 2023’s 7.4%—the joint highest rates in almost 30 years—services inflation dipped to 5.2% in July.
According to Debapratim De, director of economic research at Deloitte, the latest official data are unlikely to change the Bank’s thinking on interest rates. “We expect rates to be kept on hold in September, but two further cuts remain likely this year.” Darren Jones, chief secretary to the Treasury, stated that the new Labour government is “under no illusion” about the challenges that still lie ahead. The Bank of England’s September interest rate decision will likely incorporate July’s inflation increase. Last month, it cut rates to 5% from 5.25%, the first reduction since the start of the pandemic. Experts have predicted further cuts this year. While higher rates are good for savers, they could drive up the cost of mortgages and other loans for consumers.
