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In the UK, prices surged by 3.8% in the year leading up to July, largely driven by a significant increase in air fares coinciding with the school summer holidays. This spike in inflation marks the highest level since January 2024 and remains well above the Bank of England’s target of 2%. Additionally, the Office for National Statistics (ONS) attributes the rise in prices to an uptick in the cost of dining out, as well as food and non-alcoholic beverages in general. The Bank’s most recent forecast anticipates inflation peaking at 4% in September.
The unexpected inflation surge in July, which exceeded economists’ predictions, follows a 3.6% increase in the year leading up to June. ONS Chief Economist Grant Fitzner highlighted a substantial 30.2% rise in air fares between June and July, the most significant jump during this period since data collection began in 2001. This sharp increase is believed to be linked to the timing of this year’s school holidays overlapping with the ONS data collection day, unlike the previous year.
Moreover, the cost of food and non-alcoholic beverages saw a 4.9% rise in the year ending in July, up from 4.5% in the previous year. This increase marked the fourth consecutive month of rising food and drink inflation, driving prices to their highest point since February 2024. Notably, products like coffee, fresh orange juice, meat, and chocolate experienced the most substantial price hikes. Responding to the latest data, Chancellor Rachel Reeves acknowledged the need to further alleviate the cost of living, emphasizing the government’s commitment to stabilizing public finances and addressing inflation concerns
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