Demand for summer travel the frighteningly expensive grub prices have pushed inflation up by more than expected – to its highest level since January 2024
Beleaguered Chancellor Rachel Reeves suffered another blow yesterday as inflation rose by more than expected. Official figures for July showed inflation jumped as demand for summer travel pushed up air fares and food prices continued to climb.
Consumer Prices Index (CPI) inflation increased to 3.8% in July, from 3.6% in June, the Office for National Statistics (ONS) said. Most economists had been forecasting inflation to rise to 3.7%.
It means the headline rate remained at the highest level since January 2024, when it hit 4%. The ONS said transport was the biggest factor driving up overall inflation last month, particularly due to a spike in flight prices as families booked trips during the school summer holidays.
Air fares soared by 30.2% between June and July, the biggest jump since the collection of monthly data began in 2001.
The average price of petrol rose by 2p per litre between June and July, and the average diesel price by 2.9p per litre over the period, the data showed.
Prices across UK restaurants and hotels also increased last month, largely driven by a jump in overnight hotel stays booked the night before.
Food and drink inflation rose to 4.9% in July, from 4.5% in June.
This marked the fourth month in a row that the annual rate had increased and remained at the highest level since February 2024.
Chancellor Rachel Reeves acknowledged that there was “more to do to ease the cost of living” following the figures.
She said: “We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.
“That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children and are rolling out free breakfast clubs for every child in the country.”
Kris Hamer, director of insight for trade body the British Retail Consortium, said: “Households are once again seeing the cost of their weekly shop climb, with food inflation now up by 1.9 percentage points in just four months.
“This surge has been a key driver behind headline inflation, alongside a rise in transport costs, piling fresh pressure on families already being forced to cut back.
“The Bank of England has been clear that Government policies, which have driven up the costs of employment, are fuelling price rises at the till, while poor harvests and global instability have also added further cost pressures.”
He added that there was some “limited relief” for consumers with clothing and footwear inflation easing and some everyday food items like olive oil, butter and cheese falling month-on-month.
The Bank of England is expecting CPI inflation to continue rising to a peak of 4% in September, before price rises start to ease.
The central bank is tasked with keeping inflation at 2%.
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