The Consumer Prices Index (CPI) rose by 10.1 per cent in the 12 months to July 2022, up from 9.4 per cent in June
In order to maintain living standards, it is estimated that each household in the UK will need to find an additional £2,528 each year, or £70.3bn overall.
Canada Life technical director Andrew Tully says: “Today’s inflation numbers will leave households right across the country reeling from spiralling living costs with no light at the end of the tunnel. The immediate outlook looks bleak, with The Bank of England predicting the peak of inflation to come later this year at around 13 per cent. The peak, when it does come, will offer little respite when the tail of inflation is predicted to last well into next year and not come close to the target of around 2 per cent for two years.
“While UK workers continue to feel the pain as wages lag inflation, there will be some positive news in the coming months for retirees. As inflation marches on, September’s data2 will determine the living standards for millions of retirees across the UK for the coming year, and it is highly likely the state pension is on track to increase by a record amount in April 2023.”
Royal London consumer finance specialist Sarah Pennells says: “The latest UK inflation figure brings more bad news for households as the consumer prices index (CPI) reached a new high of 10.1 per cent in July. With the Bank of England revising its forecast to predict CPI inflation reaching 13 per cent before the end of the year, people will be facing ever tougher decisions about their spending.
“Already spending more to get less, many households have made significant cutbacks because of the rising cost of living, and there’s no sign that this is going to change.
“We’re due to find out in the next few days how much the energy price cap will rise by from 1st October, which will pile further pressure on the budgets for over 20 million households that aren’t on a fixed price tariff.”
Aegon pensions director Steven Cameron says: “In a matter of months, inflation has gone from a distant 1980s memory to a ‘flashing red threat’ to millions of households across the UK today. The further increase to 10.1 per cent from 9.4 per cent last month means we are now into double digits, with rises expected to skyrocket further to 13% later this year. Put another way, your £10 last year is worth £9 today.
“With the final destination of energy prices unknown, the big question is how and to what extent the Government can support individuals facing further massive energy cap hikes. Research (*) this month from Aegon showed financial worries are already at almost double the levels during the pandemic and this latest inflation increase, crossing the double digit threshold, will dial those worries up another notch.
“This latest inflation hike comes a day after official figures showed year on year increases in average regular earnings have slowed to 4.7 per cent, well under half the current 10.1 per cent rate of inflation, creating the worst loss in ‘real terms’ earnings for decades. For millions, the overriding focus will be on paying bills over the winter, but the aftermath could also come at a cost to longer term financial futures.”