UK inflation rate has increased sharply in the past few months resulting in an increase in the cost of living, including food prices.
The Office for National Statistics (ONS) released a report on June 22, 2022, titled Inflation and the cost of living for UK households, overview: June 2022. The report discusses the consumer price inflation that has markedly increased in the past few months. According to the report, the 12-month growth rate reached 7.9% for the Consumer Prices Index (CPI), including owner occupiers’ housing costs (CPIH), in the month of May 2022. The report added that in the same month of May 2022, the percentage touched 9.1% for the CPI.
The ONS report continues that the main drivers of the consumer price inflation over the last few months have been transport, food and energy. These are the three essential spending categories for most UK households. Now, you would understand that even though prices may rise, there is a limit to how much consumers can cut down on consuming food and using energy & transport to save money.
What is UK Inflation Rate
Inflation is all about an increase. What kind of increase? It is a growth in the price of goods and services over a period of time.
For example, if Product A costs £1 and this increases by 5p in comparison to one year back, then inflation for Product A is 5%. Every month the government releases the inflation figure that can tell you how much the prices are rising. As of July 2022, the UK inflation rate stands at 9.4%.
Interestingly, according to the Consumer Prices Index, inflation in the UK was less than 1% in May 2020. Today in 2022, two years later, the same inflation has climbed steadily upward and touched the 9.4% level.
Three big drivers of UK inflation rate
The ONS study points out that there are three big drivers of consumer price inflation over the past few months. They are:
- Housing, water, electricity, gas and other fuels
- Transport
- Food and non-alcoholic beverages
We are guessing that you already had an inkling that this would be the case. How? You are at the proverbial receiving end, aren’t you?
The rise in prices of “housing, water, electricity, gas and other fuels” has been driven by energy since the Ofgem price cap rose in April 2022. This price rose even more in March and then continued its upward trend in May 2022.
The transport sector also has seen consumer price inflation. By May 2022, the percentage touched 32.8%, the growth rate for petrol and diesel.
Food and non-alcoholic beverages have also witnessed an upward growth curve. As to food price inflation, this has been driven by the increase in prices of diet staples like bread and cereals, meat and oil and fats between April and May 2022.
Inflation UK rate is seeing an upward curve
Typing ‘inflation UK rate’ on online search engines would only fill your mind with more depressing facts. But you still want to know why are prices rising so fast.
Let’s tell you a few quick things contributing to the UK’s high inflation rate.
- Energy bills: Energy bills have increased rapidly due to the high oil and gas prices, making many of you close to pressing the mental panic button. This price would rise sharply again in October.
- Petrol and diesel prices: An increase in petrol and diesel prices is partly due to the Ukraine war that has raised the crude oil cost.
- Food prices. The Ukraine war has put the cost of grain production under pressure.
- Used cars: The prices of used cars have increased and contributed to rising inflation.
- Raw materials: The prices of raw materials, furniture and household goods, services and food in restaurants and hotels have gone up.
- Mortgage payments: Interest rates are higher, which has made mortgage payments more expensive.
However, during your food and essential shopping outings, you would also have noted that the cost of some products has not risen much. But there are other items whose cost has shot through the roof.
It is at this point you realise that the cost of living crisis in the United Kingdom is really pinching you daily. We hope that the new prime minister will be able to alleviate your pain and make you smile happily again.
