INFLATION hit 10.1% in the 12 months to July 2022, up from 9.4% in June, pushing UK inflation into double digits for the first time since 1982.

With prices rising faster than wages, rocketing living costs are eating into household budgets which is being felt across the UK.

Fuel and energy costs are an obvious contributing factor to inflation but food and non-alcoholic drinks were the largest contributor to rising prices in July, according to the ONS.

The bare necessities of bread, cereals, milk, cheese and eggs were those which rose the fastest, while we saw the cost of other staples also rise such as meat, veg, toilet rolls and pet food.

This has largely stemmed from Russia’s invasion of Ukraine with the war disrupting supplies from the two countries, who are both major exporters of sunflower oil and wheat.

Whilst some commodities have eased in recent months, there is a time lag of around six months before we see this feed through to prices on the shelves – and we all need to bear this in mind.

Contending with this level of inflation, supermarkets have had no choice but to pass on this extra cost from suppliers to consumers.

In recent weeks, we have seen a glimmer of hope.
Fuel prices on the forecourts began to fall but with inflation expected to rise further when higher energy bills hit, many are calling for more action to help those most in need.

The typical household energy bill is forecast to reach £3,582 in October and £4,266 in January, when the price cap goes up again.

Warnings of recession later in the year have been predominant news in the media, projecting a five-quarter shrinking in the economy lasting until the end of next year.

Without doubt, the cost of living crisis will be a top challenge for the new prime minister in the autumn.

The plans of action from both leadership candidates are poles apart, but neither can ignore the scale of this crisis.

In reality, any government response to this is likely to involve substantially more fiscal firepower.

Today’s forecasts from economists suggest inflation in the UK will hit 18% early next year, significantly higher than previous modelling and the BoE’s prediction of 13%.

The last time UK inflation reached 18% was in 1976 when an oil supply shock ripped through the global economy and left the UK seeking a bailout from the International Monetary Fund.

It goes without saying that there are tough times ahead of us living in the UK.

We take great pride in the support we give to our clients during these difficult periods.

We remain visible and are here to coach, guide and reassure you.

If you are feeling concerned or need advice on managing your money, we’re here to help, so please don’t hesitate to get in touch HERE.