UK Inflation Hits Double Digit, Highest In 40 Years

UK Inflation Hits Double Digit, Highest In 40 Years

U.K. inflation accelerated more than expected in July to the highest level in 40 years, intensifying a squeeze on consumers and adding to pressure for action from the government and Bank of England.

The Office for National Statistics said that the Consumer Prices Index rose 10.1% in July from a year earlier after a 9.4% gain the month before

The reading was higher than expected by the Bank of England and private-sector economists. Economists' forecasts in a Reuters poll for inflation were to rise to 9.8% in July.

Rising food prices contributed the most to the month's increase, indicating inflationary pressures are spreading beyond energy.

Core inflation -- excluding energy, food, alcohol, and tobacco -- accelerated to 6.2%, increasing from 5.8% in June.

The Bank of England earlier this month raised its key interest rate by 0.5% to 1.75% - its first half-point rise since 1995. Its forecast inflation would peak at 13.3% in October, writes Reuters.

Data from the Office for National Statistics showed that prices rose 0.6% in July from June on a non-seasonally adjusted basis. The annual rate of retail price inflation hit 12.3%, its highest since March 1981.

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