Food costs push price rises to new 40-year high

Food costs push price rises to new 40-year high

Soaring food costs have pushed UK inflation into double digits for the first time since 1982, with prices continuing to rise at their fastest rate for more than 40 years.

Inflation hit 10.1% in the 12 months to July, up from 9.4% in June, the Office for National Statistics (ONS) said.

Soaring living costs are eating into household budgets, with prices rising faster than wages.

The Bank of England has said inflation could peak at more than 13% this year.

Energy, petrol and diesel costs are also contributing to inflation. But food and non-alcoholic drinks were the largest contributor to rising prices in July, according to the ONS.

The price of bread, cereals, milk, cheese and eggs rose the fastest, while the cost of vegetables, meat and chocolate were also higher.

Prices also rose for other staples, such as toilet rolls, pet food and toothbrushes.

The increase was above all economists’ forecasts in a Reuters poll for inflation to rise to 9.8% in July, and will do nothing to ease the Bank of England’s concerns that price pressures may become entrenched.

Despite warning that a recession was likely, the BoE earlier this month raised its key interest rate by 0.5% to 1.75% – its first half-point rise since 1995.

It forecast inflation would peak at 13.3% in October, when regulated household energy prices are next due to rise.