Annual inflation measured by the CPI rose to 4.4% in July, up from 3.8% in June, according to the Office of National Statistics.
This 0.6% leap in the annual rate is the highest change since records began in 1997 and double the Government’s 2% target.
The largest upward pressure again came from food and nonalcoholic beverages which rose from an annual rate of 9.5% in June, to 12.3% in July. Food inflation alone has spiralled to a CPI record 13.7% on the year, up from 10.6% in June.
The average price of petrol at the pumps increased by 1.2p per litre between June and July this year, to stand at 118.8p, compared with a fall of 0.4p last year. Air passenger transport was a significant contributor too, rising from 5.4% year on year in June to 8.9% in July.
Electricity, gas and other fuels saw an increase in the annual rate from 13.8% to 16.1%.
Retail prices index (RPI) inflation rose to 5.0% in July, up from 4.6% in June. The main factors affecting the CPI also impacted on the RPI. Additionally, there was a large downward contribution from housing with the main effect coming from house depreciation which is excluded from the CPI.
The figures will make tough reading for the MPC as it deliberates on its interest rate decision for next month. This month, rates were kept steady at 5%. The Bank of England’s Quarterly Inflation Report is due to be released tomorrow.
Commenting on the rising inflation figures, Royal London Asset Management chief economist Ian Kernohan, says: “As expected, inflation continues to move higher, however the market will be more interested in tomorrow's Inflation Report which will include the MPC's view on the likely path of inflation over the next couple of years. This will give us a good indication of where interest rates are headed; we think down.”
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