Britain’s Office for National Statistics (ONS) has said that the UK's annual consumer price inflation rose in June to 9.4%, the highest since February 1982, up from May’s 9.1% and above the 9.3% consensus in a poll of economists.
Surging petrol and food prices last month pushed the inflation to its highest rate in 40 years, according to official figures that bolstered the chances of a rare half percentage-point Bank of England (BoE) interest rate hike next month.
The latest increase means Britain has had the highest rate of inflation seen in any Group of Seven advanced economy since 1985, although many smaller EU countries are currently seeing even faster growth in prices.
The data bolstered bets that the BoE will opt for a 50-bps rate hike next month, which would be the biggest since 1995. The European Central Bank (ECB) is also considering such a move. BoE governor Andrew Bailey said that the scale of borrowing costs increase was on the table but not “locked in”.
The BoE has raised rates five times since December as it tries to stop the surge in inflation from becoming embedded in Britain’s economy, and it is expected to increase them again on August 4. “Soaring inflation means that momentum for a half point interest rate rise in August is growing,” Suren Thiru, economics director of accountancy trade body ICAEW, said.
