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Inflation hits 40 year high of 10.1%

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7am: Inflation soars

Inflation hit 10.1% in the year to July, according to the Office for National Statistics, up from 9.4% in June.

Higher food and transport costs are the key factors. Food inflation is running at 12.6%.

The latest headline figure was well above analysts’ predictions of 9.8%.

Alpesh Paleja, CBI Lead Economist, said: “The cost-of-living crisis is now very real for both households and businesses, so there needs to be a concrete way forward to support vulnerable groups with higher energy bills. 

“But we also need to think about the longer term: incentivising investment in the energy transition is key to reducing our exposure to global price shocks, and bolstering the UK’s energy security.

“Taking overdue actions to shore up potential growth – for example, adding immediate flexibility to the Apprenticeship Levy for one year – will also build resilience to price pressures over the long term.”

Helen Dickinson, chief executive of the British Retail Consortium, said: “With inflation showing little sign of slowing, retailers could face a 10% hike in their business rates bill in the coming year.

“This would impose a cost-nightmare of hundreds of millions of pounds on retailers who are already struggling with razor-thin margins. The next Prime Minister must act, freezing the multiplier to avoid placing a further burden on retailers, and the customers they serve.”

Chancellor Nadhim Zahawi said: “I understand that times are tough, and people are worried about increases in prices that countries around the world are facing. 

“Although there are no easy solutions, we are helping where we can through a £37 billion support package, with further payments for those on the lowest incomes, pensioners and the disabled, and £400 off energy bills for everyone in the coming months.

“Getting inflation under control is my top priority, and we are taking action through strong, independent monetary policy, responsible tax and spending decisions, and reforms to boost productivity and growth.”


Global markets

A busy day of economics news follows the UK inflation reading, alongside producer and retail prices, followed by eurozone GDP and employment figures at 1000 BST, and US retail sales at 1330 BST. In the evening, the US Federal Reserve will release the minutes from its latest monetary policy meeting at 1900 BST.

The pound was quoted at $1.2118, up from $1.2099 late Tuesday.

In Tokyo, the Nikkei 225 was 1.1% higher in late trade, while the S&P/ASX 200 in Sydney was up 0.3% shortly before the closing bell. In China, the Shanghai Composite was 0.1% higher in afternoon dealings. The Hang Seng in Hong Kong was up 0.8%.

In New York, the Dow Jones Industrial Average added 0.7% and the S&P 500 added 0.2%, though the Nasdaq Composite lost 0.2%.



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