Why has the UK's inflation rate hit a 40-year high and will things get worse?

UK inflation has risen further to 9.1%. It's the highest rate in 40 years as the cost of living deepens across the board.Here we look at what that means for your day-to-day spending, explain what's driving the increase, and examine whether things will get worse.

• What is inflation?

Inflation is the increase in prices of goods and services over time. For instance, if a loaf of bread costs £1, then rises by 5p the following year, the annual inflation rate is 5%.

• What are the biggest price increases driving inflation?

Energy bills

Oil and gas prices surged earlier this year, in part due to the Ukraine war.

As a result, the UK's energy price cap increased by 54% and 22 million customers saw their payments skyrocket.

Petrol

Fuel prices also shot up after Russia invaded Ukraine. In May, petrol and diesel prices jumped by 32.8% from the previous year, which is the highest rate since records began in 1989.

Food

Food has increased by a massive 8.7%, with bread, cereals, meat, oil and fats seeing the largest increases.

From April 2021 to April 2022, the price of pasta had increased by 50%, crisps by 17%, bread and minced beef by 16% and rice by 15%.

• Why are prices rising?

The Covid pandemic hit global supply chains with a combination of pent-up demand and delays to shipping as factories across the world face lockdowns and worker absences. Russia's invasion of Ukraine compounded the problem.

The war has sent the price of fuel and energy to record levels in recent months as sanctions against Russia - one of the biggest exporters of crude oil and natural gas - unfold. The conflict is also sending food prices jumping higher due to the knock-on effect on some key ingredients, such as cooking oil and wheat, given that Ukraine and Russia are major producers of these commodities.

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• Are things going to get worse?

Probably. Inflation is expected to rise even higher later this year when the next energy price cap review takes effect in October. The Bank of England predicts inflation could peak at an eye-watering 11% in the autumn, which it has cautioned will leave the UK on the brink of recession.

• What can be done to improve the situation?

In an attempt to stem the pace of surging prices, the Bank of England recently increased UK interest rates from 1% to 1.25%.

The BoE said this change will take time to work, adding: "Inflation will keep rising this year and start to come down next year. We expect it to be close to 2% in around two years".

Reacting to Wednesday's figures, Chancellor Rishi Sunak said the government is using "all the tools" at its disposal to bring inflation down.

“We can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth,” he said.