UK inflation rate rises first time in 2024

The inflation rate in the United Kingdom (UK) rose to 2.2 percent in July, compared to 2.0 percent in June.

This is the first increase in 2024.

The rate also surpassed the Bank of England’s (BOE) target of 2 percent.

The Office for National Statistics (ONS) said the increase was largely due to prices of gas and electricity falling by less than they did last year.

According to BBC, the latest figures indicate prices are now rising faster across the UK than in previous months, but still at a slower pace than in 2022 and 2023 when households were hit especially hard by higher energy and food bills.

It said inflation, which measures the rate at which prices rise, surged to 11.1 percent in the wake of the Ukraine war and pandemic-related supply chain crunches, driving up the cost of living for millions.

However, the publication said inflation has been gradually decreasing until June, due to the Bank of England raising interest rates to reduce consumer demand, as the bank expects inflation to increase further this year before declining again.

Grant Fitzner, the chief economist at the ONS, said inflation saw a slight increase in July because, while domestic energy costs did decrease, the drop was smaller compared to the same time last year.

“This was partially offset by hotel costs, which fell in July after strong growth in June,” Fitzner said.

In July, food price inflation had settled down to just 1.5 percent, according to the ONS.

ONS said services inflation in July stood at 5.2 percent, down from 5.7 percent in June.

BBC reported BOE is expected to take July’s increase in the overall inflation rate into account when it votes on interest rates in September.

Also, the publication said BOE reduced rates to 5 percent from 5.25 percent last month, marking the first cut since the pandemic began and experts are predicting additional cuts later this year.

The Cable