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UK inflation hits 10.1%, driven by soaring food and fuel prices

<span>Photograph: Matthew Horwood/Getty Images</span>
Photograph: Matthew Horwood/Getty Images

UK inflation has risen above 10% for the first time in 40 years, driven by soaring prices for food and fuel as households come under mounting pressure from the cost of living crisis.

The Office for National Statistics said the consumer prices index rose by 10.1% in the year to July, up from a reading of 9.4% in June and entering double figures at an earlier stage than anticipated. The figure was last higher in February 1982.

It is only the fourth time in 70 years that inflation has breached the 10% threshold, the other periods being 1951-52, 1973-77 and 1979-82.

The reading exceeded the 9.8% forecast from City economists, as the cost of food and drink rose at the highest rates since 2008 amid a broad-based inflationary burst across the economy.

Related: Annual grocery bills in Great Britain will soar by £533, experts predict

The biggest increases came for bread and cereals, dairy, meat and vegetables, with the rising cost of food leading to record increases for restaurant and hotel prices and pushing up the cost of takeaways. Price rises for other staple items such as pet food, toilet rolls, toothbrushes and deodorants also sent inflation soaring.

Prices for package holidays and air fares rose sharply, driven by a summer rush reflected in packed airports across the country.

The latest figures will pile renewed pressure on the government and Conservative leadership candidates amid accusations the frontrunner, Liz Truss, and Rishi Sunak, the former chancellor, are failing to grasp the scale of the cost of living emergency.

Rachel Reeves, the shadow chancellor, said soaring prices were leaving families worried about how to make ends meet in the run-up to a difficult winter. “People are worried sick, and while the Tories are busy fighting and ignoring the scale of this crisis. Only Labour can give Britain the fresh start it needs,” she said.

Households are expected to come under further pressure this autumn from a fresh rise in energy bills, which the Bank of England forecasts will drive inflation above 13% and trigger a long recession as families rein in their spending.

Soaring energy prices in Europe, exacerbated by Russia’s invasion of Ukraine, have fuelled high inflation across the continent. Although petrol and diesel prices in Britain eased in July from record levels seen a month earlier, the ONS said costs remained significantly higher than a year earlier, adding to inflation.

Economists warned that soaring food prices and rising energy bills would hit poorer families hardest. “It will take many months, and much more living standards pain, before inflation starts to ease,” said James Smith, a research director at the Resolution Foundation thinktank. “So, the number one priority for the next prime minister will be to offer significant support to help millions of families through a brutal winter and beyond.”

Sajid Javid, who is backing the foreign secretary, Liz Truss, in the Tory leadership race, said she would “provide more support” with energy bills and use an emergency budget within weeks of entering No 10. However, Truss has suggested there would be no more “handouts” to help families, prioritising tax cuts instead.

Charities have called for a doubling of support for the poorest families to avert rising poverty this winter. “No one can disagree this is a national emergency,” said Rebecca McDonal­­d, the chief economist at the Joseph Rowntree Foundation.

“Today’s sobering reading means the next few months will be profoundly more difficult. People are looking for a sign that help is on the way. Yet the government doesn’t seem to have grasped the full scale and urgency of this situation.”

Annual energy bills in Great Britain are forecast to rise to more than £3,500 from October, with a further jump to more than £4,200 in January expected, up from a current level of just under £2,000. Labour has said it would freeze the price cap.

Bills had been limited to £1,400 as recently as October last year. Ofgem, the industry regulator for Great Britain, is expected to announce plans for this autumn’s price cap next week.

The chancellor, Nadhim Zahawi, said getting inflation under control was his top priority, while the government would act to support hard-pressed families. “I understand that times are tough, and people are worried about increases in prices that countries around the world are facing,” he added.