Inflation in the UK has surpassed double digits and now stands at 10.1%, the latest figures published by the Office for National Statistics (ONS) have confirmed.

The Consumer Prices Index (CPI) climbed by 10.1% in the 12 months to July, up from 9.4% in June.

Inflation has risen sharply over recent months and the ONS has confirmed that its July figure was again the highest annual CPI inflation rate in its National Statistic series, which began in January 1997. Estimates are now suggesting that the CPI rate would last have been higher than its current level in 1982, when estimates ranged from nearly 11% in January down to approximately 6.5% in December.

The ONS has reported that rising food prices made the largest upward contribution to the change in the CPI annual inflation rate between June and July. CPI inflation also increased month-on-month by 0.6% in July, which compares with no change in the same month in 2021.

When the Bank of England (BoE) increased interest rates to 1.75% earlier this month, the Bank stated that CPI inflation is expected to rise to just over 13% in the fourth quarter this year, and could remain at “very elevated levels” throughout much of 2023. The BoE does not expect inflation to fall back to the Bank’s 2% target for another two years.

Commenting on the latest inflation rise, technical director at Canada Life, Andrew Tully, said: “Today’s inflation numbers will leave households right across the country reeling from spiralling living costs with no light at the end of the tunnel.

“The immediate outlook looks bleak, with the BoE predicting the peak of inflation to come later this year at around 13%. The peak, when it does come, will offer little respite when the tail of inflation is predicted to last well into next year and not come close to the target of around 2% for two years.


“While UK workers continue to feel the pain as wages lag inflation, there will be some positive news in the coming months for retirees. As inflation marches on, September’s data will determine the living standards for millions of retirees across the UK for the coming year, and it is highly likely the state pension is on track to increase by a record amount in April 2023.”

Head of investment trusts at Janus Henderson, Dan Howe, added: “It is essential in inflationary environments like this that families and individuals take action to protect their savings. Interest rates remain way below inflation, so our hard-earned and vitally important savings are at risk of rapid erosion if left languishing in bank accounts.

“Investing those savings, particularly in equities, is one option for families to consider, given they can offer the potential for both capital and income growth, as well as a potential further income stream which would certainly be welcome as the cost-of-living crisis continues to pinch. Another thing for families to consider is that diversification is our friend in times of uncertainty.

“As the pressure of rising costs and looming recession begins to take its toll on specific industries, investing in collectives, for example, allows investors to spread their exposure across a range of sectors and regions rather than depending on a few single stock investments.”

Share Story: