Consumer price inflation in the U.K. jumped to 10.1% in July, the highest since February 1982, making the U.K. the first major wealthy economy to see a double-digit price increase as soaring food costs exacerbated household budget constraints.Despite warnings this month of a possible recession, the Bank of England raised its key interest rate to 1.75% – the first 50 basis point increase since 1995. Inflation is expected to have peaked at 13.3% in October, when regulated household energy prices are set to rise again.
The UK is not the only country facing soaring prices, but it is the first G7 economy to have an inflation rate above 10%.The 12.6% annual food price increase – the largest since 2008 – was the main reason for the jump in CPI inflation from June to July, while higher energy and gasoline prices were the main drivers for the year. Take-out food is more expensive, as is all-inclusive travel.