Figures from the Office for National Statistics (ONS) showed the government’s preferred measure of the cost of living – the consumer price index – was up from 9.1% in May. Inflation, which stood at 2.5% in June 2021, has now risen for nine consecutive months and the Bank of England expects it to peak above 11% when energy bills rise again in the autumn. The City had forecast inflation to rise to 9.3% after the price of unleaded petrol rose by around 20p/litre in June. Markets expect the Bank to respond to the highest inflation since 1982 by raising interest rates by either 0.25 or 0.5 percentage points next month. Prices rose 0.8% between May and June – the highest increase since modern records began in 1988 – compared with a 0.5% jump in the same month a year earlier. ONS Chief Economist Grant Fitzner said: “Annual inflation rose again to hold its highest rate for over 40 years. The increase is due to the increase in fuel and food prices. These were slightly offset by falling used car prices.” The UK’s statistics office said the cost of motor fuel rose more than 42% in the year to June, with petrol and diesel hitting new highs last month. More expensive fuel was only partly offset by a drop in the price of used cars. Food was the other major factor behind the rise in inflation, with particularly sharp increases in the cost of milk, eggs and cheese contributing to a 1.2% rise between May and June and a 12-month rise of 9.8%. Core inflation – which strips out food, energy, alcohol and tobacco – stood at 5.8% last month, up from 5.9% in the year to May. Even more inflationary pressure could be in the offing, according to separate ONS producer price figures, which measure how much companies pay for their fuel and raw materials and the prices they charge their customers. “The cost of both raw materials and goods leaving factories continued to rise, driven by higher metal and food prices respectively,” Fitzner said. “These increases saw raw materials post their highest annual rise on record, with manufactured goods at a 45-year high.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk The chancellor, Nadhim Zahawi, said: “Countries around the world are struggling with higher prices and I know how difficult this is for people here in the UK, so we are working together with the Bank of England to reduce inflation. “We’ve introduced £37 billion worth of help for households, including at least £1,200 for 8 million of the most vulnerable families, and we’re taking more than £2 million more out of the lowest paying staff.” His Labor counterpart Rachel Reeves said: “The cost of living crisis worries families more every day, but all we get from the Tories is chaos, distraction and financial fantasy without funding.”
