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UK inflation hits new 40-year high

July 20, 2022

Inflation in the UK has climbed over 9%, its highest rate since 1982. The continued increase could lead to the Bank of England hiking its key interest rate to a multiyear high.

Everyday basic food products next Pound Sterling banknotes
Soaring fuel and food costs made the biggest upward contributions to the inflation rateImage: Artur Widak/NurPhoto/picture alliance

UK inflation hit a new 40-year high in June as fuel and food prices continue to soar, official data showed Wednesday.

The Consumer Prices Index jumped to 9.4% last month, the highest since 1982, from 9.1% in May, the Office for National Statistics said in a statement.

The most significant contributors to the rising inflation were a 42% year-on-year rise in petrol prices and an almost 10% increase in food prices.

Wednesday's data supported analysts' suggestions that the Bank of England's (BoE) Monetary Policy Committee could consider a 50 basis-point interest rates hike at its August policy meeting, which would be the biggest since 1995.

The BoE has raised its key interest rate five times since December, lifting it to 1.25% from a record-low 0.1% but by no more than 0.25 percentage points each time.

BoE Governor Andrew Bailey had said that "a 50-basis-point increase will be among the choices on the table when we next meet."

UK follows inflation spikes in Europe and the US

The latest increase means Britain had the highest rate of inflation seen in any Group of Seven advanced economies since 1985.

Inflation has soared to the highest level in decades in many countries, fueled by the war in Ukraine and the easing of coronavirus restrictions unleashing more consumption of goods and services.

The European Central Bank has said it intends to hike key interest rates by 25 basis points later this week.

It comes as inflation in the eurozone has spiked to multiyear highs, while the single European currency, the euro, has sunk to lows last seen two decades ago.

US inflation reached a four-decade high in June, with consumer prices soaring by 9.1% compared to the previous year, the US government said last week.

lo/wmr (AFP, Reuters)