The U.K.’s Office for National Statistics said consumer prices were 9.4% higher in June than a year earlier, the highest rate of inflation since 1982 and a pickup from 9.1% in May. Rising petrol and diesel prices for motorists and dearer food pushed Britain’s annual inflation rate, which stood at 2.5% in June 2021 and has now risen for nine months in a row. The Bank of England expects it to peak at above 11%, setting the UK at the top of the inflation rate race.
Economists expect the annual rate of consumer price inflation to increase further. The Bank of England (BOE) said it should top out at around 11% in the year’s final months. The U.K. sets a ceiling on home energy prices twice yearly, and the next adjustment is due in October when a further rise of 50% is expected.
“The inflation outlook remains grim,” said Sanjay Raja, an economist at Deutsche Bank. “Our updated projections now show CPI peaking at 11.3%.”
The continued acceleration of price rises makes it very likely that the BOE will raise its key interest rate when policymakers meet in early August.
