UK inflation jumped the biggest ever in August, adding pressure on households as the govternement increases taxes on workers and prepares to cut universal credit benefits starting next month.
The Office for National Statistics (ONS) stated that the measure of the consumer price index for annual inflation rose to 3.2% in August, from 2% in July, to reach the highest rate since March 2012.
The increase topped city economists' forecast for a reading of 2.9% and reflected a rise in food and beverage prices from August 2020, when Rishi Sunak's "eat to help" discount program reduced the cost of restaurant meals.
Le The 1.2 percentage point increase between July and August was the largest since records began.ents in January 1997, the year Gordon Brown submitted the Bank of England independence to manage inflation.
Workers and unions have warned households will face a 'double whammy' this winter as the cost of living rises as the government raises taxes and is preparing to make the biggest overnight cut to Social Security benefits.
"The last thing working families need right now is a another crisis in living standards, ”said Frances O 'Grady, General Secretary of the TUC.
Rehana Azam, national secretary of the GMB union, said: "Soaring inflation is part of a perfect storm that includes freezing ofs wages due to universal credit and e The withdrawal of the leave scheme and the increase in national insurance which will cost social workers £ 150 per year, "she said.
Inflation rate hit its highest level since 2012 means NHS workers have already seen their government 3% wage deal wiped out in a matter of months, while other employees the public sector will experience a further reduction in their purchasing power as wages are frozen.
The Chancellor has imposed a wage freeze on a year last November to at least 1.3 million public sector workers, including teachers, firefighters, police, city councilors, civil servants and the armed forces.
The jump will force Andrew Bailey, the governor of Bank of England , to write to the Chancellor to explain why the CPI has moved more than a percentage point away from that of Threadneedle Street 2% target a to detail the measures that the committee of monetary rate-setting policy plans to take.
Bailey was forced to write a letter to Sunak as recently as May when reading from Inflation for February was only 0.4%.
Christina McAnea, general secretary of Unison, said that wage agreements below inflation would cause an exodus in the public sector, affecting the quality of service delivery. “The pandemic has shown that decent and well-staffed services are essential to overcome any crisis. The government seems to have already forgotten this, "she said.
The latest ONS snapshot revealed price increases for a wide rangee of products and services, including food and drink in supermarkets, gas prices, CDs and video games, and used cars.
This is a labor and supply shortage put pressure on Britain's economic recovery after the lockdown and risk losing increase the cost of living for consumers as businesses struggle to digest the higher costs.
Many economists believe that the rise in inflation will be temporary, as the distortions caused by the fall in prices last year will subside and the pressure on global supply chains will gradually ease.
The ONS said the main driver of inflation was a sharp drop in the cost of un dining out in August of last year, when "Eating Out to Help " offered consumers half-price food and drink Monday through Wednesday.
Inflation is calculated using the annual change in the price of a basket of goods and services. Removing the impact of the program would have reduced the overall inflation rate by 0.4 percentage point, statisticians said.
However, many economists warn that inflation could remain persistently high as the Delta coronavirus variant and continued pandemic restrictions, along with Brexit, keep pressure on supply networks.
Reflecting additional pressure on the cost of living, the ONS said the price of food and beverages purchased from stores and supermarkets increased 1.1% in the month of 'August - the rate of chighest growth since 2008.
Household energy bills are on the verge of a sharp rise this winter as wholesale gas prices and electricity are reaching record highs, while a temporary VAT cut for the hospitality sector will be rolled back at the end of this month.
A spokesperson for the Treasury said the Bank of England was responsible for controlling inflation and the central bank expected to exceed its target rate of 2% would prove temporary .
"Government supports standard of living - we have frozen fuel taxes for the past 11 years, capped energy prices , increased the local housing allowance last year by just over £ 600 on average for 1.5 million renters on universal credit and housing allowance, and we are committed to keep on goingr to increase the national living wage so that it reaches two thirds of the median income, ”they added.