Inflation hits double figures as food and energy costs soar
The inflation rate has risen sharply over recent months and the July figure was the highest annual CPI inflation rate in the ONS’ National Statistic series which began in January 1997.
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.8% in the 12 months to July 2022, up from 8.2% in June. The July 2022 figure is the highest recorded annual inflation rate in the National Statistic series, which began in January 2006.
The biggest contributors to the annual CPIH inflation rate in July 2022 came from housing and household services (mainly energy, fuel, and owner occupiers’ housing costs), transport (petrol and diesel), and food and non-alcoholic drinks.
The typical cost of food and soft drinks have gone up 12.6% in a year, reflecting not only global supply problems, but also the massive pressure on farmers who are struggling with staff shortages and rising input costs across the board. Prices are also hit by rising energy and transport expenses at every stage in the process.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Anyone on a tight budget has had to wrestle with alarming rises in the cost of some staples – with milk prices up more than a third, and flour, butter and pasta all up around a quarter in a year. These are truly horrible hikes and are hitting people where it hurts.
“In the ONS surveys, food has always topped the list for the rises that people feel most keenly, and is second only to energy as the cost that keeps them up at night. It’s why, at the end of July, two in five people were trying to cut back on food and essentials.”
Laura Suter, head of personal finance at AJ Bell, said: “Even though the energy price cap hasn’t moved since April, electricity and gas prices still drove the inflation figure higher because the comparison is with last July. During that time gas prices have risen by 96% while electricity has shot up 54%.
“And once again petrol prices drove inflation higher. Despite prices at the pump falling through July they still remain higher than a year ago and have a long way to fall before they return to previous lows. So, while filling up a tank isn’t as painful as it was a few months ago, the impact on the inflation figure is still being felt.”
StepChange said the cost of living is now the number one reason for new clients’ debts, with the debt charity renewing its calls for more help from government for those on low incomes.
Phil Andrew, StepChange CEO, said: “Bringing the uprating of benefits forward from April 2023 to September would be a welcome way to begin to support the most financially vulnerable, as would bringing in a new targeted financial package that matches the scale of the projected October price cap rise. We would also like to see a commitment to pausing unaffordable government debt deductions, which are already a cause of major hardship.
“Months of rampant inflation will have left many low income households staring down the barrel of debt and destitution. A clear and ambitious set of measures to save them this from this fate is needed, and fast.”