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London, UK
According to official data released on Wednesday, food price increases caused British inflation to rocket to a record 40-year high in July, aggravating the nation's cost of living crisis as it faced the possibility of entering a recession. According to the Office for National Statistics, the Consumer Prices Index (CPI) increased to 10.1% last month from 9.4% in June, which was a four-decade high.
The Bank of England issued a warning earlier this month predicting that UK inflation would reach its highest level since 1980 this year, slightly above 13%. Additionally, it predicted that the nation would experience a recession near the year's conclusion that the BoE anticipates will extend until late 2023. The second quarter of the British economy decreased, according to official data released last week.
While the administration of outgoing Prime Minister Boris Johnson has promised to assist in lowering fuel prices for millions of Britons this next winter, consumer advocacy organisations are calling for significantly more governmental assistance. It comes as salary values are declining at a historic rate in Britain, which is experiencing a crisis related to the cost of living.
Johnson's replacement, who will take office after him next month and compete with former finance minister Rishi Sunak and foreign secretary Liz Truss, will inherit the ailing economy. Since the end of last year, the Bank of England has increased its benchmark interest rate many times in an effort to reduce inflation.
The most recent increase was by 0.5 percentage points, which is the largest increase since 1995 and brings borrowing costs to 1.75 per cent, increasing mortgage payments for homeowners while encouraging saving. The BoE's recent actions reflect the US Federal Reserve's and the European Central Bank's aggressive monetary policy as the world races to quell the raging inflation that has been stoked by Russia's invasion of Ukraine.
(with inputs from agencies)