Inflation rises to 2.2% in first increase this year

Citizens Advice told ITV News that despite price rises easing, give million people are having to spend more money than they have every month. Consumer Editor, Chris Choi reports

UK inflation has risen for the first time since December to 2.2%, sitting just above the Bank of England's target.

CPI rose by 2.2% in the 12 months to July 2024, up from 2% in June 2024, mainly driven by prices of gas and electricity falling by less than a year ago, the Office for National Statistics (ONS) said.

This is the first increase in inflation since last December when inflation was 4%.

Responding to the figures, chief secretary to the Treasury Darren Jones, said: “The new government is under no illusion as to the scale of the challenge we have inherited, with many families still struggling with the cost of living.

"That is why we are taking the tough decisions now to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.”

Shadow chancellor Jeremy Hunt said Wednesday’s inflation figures showed more needed to be done but the government must not use rising prices "as an excuse" to bring in tax rises.

Liberal Democrat Treasury spokeswoman Sarah Olney said Wednesday’s inflation figures showed the cost-of-living crisis had not ended.She said: “The government needs to tackle the cost-of-living crisis head-on, starting by investing in our farmers to bring down food prices, saving families money by expanding free school meals to all children in poverty and implementing a one-year freeze to rail fares.”

New researched has showed that the cost of the cheapest groceries jumped more sharply than more premium brands, adding to the pressure poorer households face.

Figures from the Institute for Fiscal Studies found “cheapflation” between 2021 and 2023 meant poorer households paid 29.1% more for their food over the period, while much wealthier households only had a 23.5% increase.

Inflation measures the speed at which prices are rising year-on-year and is keenly watched by government, business and economists.

Inflation hit a peak of 11.1% in October 2022, after a sharp rise in energy prices sparked by Russia’s invasion of Ukraine.

That prompted the Bank to raise interest rates to a 16-year high of 5.25% last year, which it only cut for the first time since then this month, in a quarter-point drop to 5%.

The Bank of England said on August 1 that the fall-away of energy bills in the wider inflation figures would show “more clearly the prevailing persistence of domestic inflationary pressures”. The latest rise will likely affect the Bank of England's decision on whether to cut interest further.

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The cut earlier this month was only approved by a small majority on the committee.

Interest rates are seen as one of the few ways to keep inflation under control as higher rates can discourage spending.

Officials expect inflation will continue to nudge up for the rest of 2024 before falling gradually again.

The closely-watched annual rate of CPI services price inflation fell to 5.2% in July, down from 5.7% in June, its lowest rate since June 2022.

Experts have warned that persistently high services price inflation could risk pushing the overall inflation data up further, but the drop could provide some encouragement to policymakers.

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