UK Inflation Jumps to 9.4 Percent as Food and Fuel Prices Soar

The price of diesel and unleaded petrol fuels are displayed on a sign outside a BP petrol station in Wigan, northwest England, on June 8, 2022. (Paul Ellis/AFP via Getty Images)

Soaring food and fuel prices have pushed the UK’s inflation to 9.4 percent in June, the highest in 40 years, official data have revealed.

The inflation rate, as measured by the Consumer Prices Index (CPI), was up from 9.1 percent in May and exceeded the 9.3 percent expected by most economists.

According to new data from the Office for National Statistics (ONS), the cost of motor fuels jumped by 42.3 percent in the 12 months to June, the biggest leap since records began.

Grocery bills have also risen sharply, with food and non-alcoholic drink prices having risen by 9.8 percent in the year to June 2022, the highest rate since March 2009.

The ONS said the largest upward effect came from essentials such as milk, cheese, and eggs, but big price rises were also seen for vegetables, meat, and other food products, such as ready meals.

ONS chief economist Grant Fitzner said: “Annual inflation again rose to stand at its highest rate for over 40 years. The increase was driven by rising fuel and food prices; these were only slightly offset by falling second-hand car prices.”

Yael Selfin, chief economist at KPMG, said the peak in inflation is “still some way off” and “more pain is on the way” for household budgets as the high rate of inflation continues to outpace wage growth, bringing down the real value of incomes across the UK.

New PM Urged to ‘Get Their House in Order’

Newly appointed Chancellor Nadhim Zahawi and Bank of England governor Andrew Bailey have both pledged to get inflation under control.

Zahawi said, “Countries around the world are battling higher prices and I know how difficult that is for people right here in the UK, so we are working alongside the Bank of England to bear down on inflation.”

In a speech on Tuesday evening, Bailey said a bigger 50 basis percentage point rise in the interest rate—which would take rates from 1.25 to 1.75 percent—will be one of the options on the table at the next Bank meeting as it looks to “act forcefully” on inflation.

Meanwhile, a business group has called on the next prime minister, who will replace Boris Johnson in early September following the Conservative leadership election, to focus on tackling inflation.

The British Chambers of Commerce (BCC) said it is vital for the government to demonstrate that “despite political upheaval” it can still manage the economy.

BCC director of policy and public affairs Alex Veitch said that the new prime minister and chancellor must use the autumn budget to “reset, rethink, and get their house in order.”

“This inflationary surge sits alongside a poor economic outlook and unless the government acts with urgency the chances of a recession will only increase,” he said.

PA Media contributed to this report.