Inflation in the United Kingdom has accelerated to a new 40-year high, driven by rising food and fuel prices that are contributing to a cost-of-living crisis.
Consumer prices rose 9.4% this year through June, up from 9.1% the previous month, the Office for National Statistics said on July 20. The new figure is the highest since 1982, when inflation peaked at 11%.
Russia’s war in Ukraine has boosted food and energy prices around the world, with shipments of oil, natural gas, grain and cooking oil disrupted. That has added to rising prices that began last year as the global economy started to recover from the COVID-19 pandemic.
Bank of England Governor Andrew Bailey said Tuesday that the bank is likely to consider raising interest rates by half a percentage point at its next meeting to help control inflation. The bank has raised rates five times since December, with the last increase a quarter-point in June that sent its key rate to 1.25%.
We have been clear that we see the balance of risks to inflation as on the upside, Bailey said in a speech. Here, I would pick out the risks from domestic price and wage setting, and this explains why at the last meeting we adopted language which made clear that if we see signs of greater persistence of inflation, and price and wage setting would be such signs, we will have to act forcefully.
The biggest contributor to inflation is the soaring cost of gasoline and diesel fuel, with motor fuel prices jumping 42.3% in the past year. Gasoline cost 184 pence a litre ($8.37 a gallon) in June, the statistics office said.
Food prices rose 9.8% over the year, driven by the rising cost of eggs, dairy products, vegetables and meat.
Consumer prices are soaring worldwide, with U.S. inflation jumping to a new four-decade high in June, at 9.1%, while the 19 countries that use the euro saw it reach 8.6% last month.
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