Air fares and food prices push up inflation to 3.8% in July

Prices in the UK rose by 3. The year-to-date average of air fares and food increased by 8% in the year to July, largely due to a jump in the cost of air tickets and food. According to the Office for National Statistics (ONS) results, inflation is at its highest rate since January 2024 and still much above the Bank of England's target of 2%. Although the timing of school holidays likely contributed to the increase in airline fares, higher food costs were triggered by increases in the cost of beef, chocolate and confectionery, instant coffee, and fresh orange juice. The marginally higher-than-expected rise in inflation has boosted economists' hopes that the Bank of England will slow the pace of interest rate cuts.

The rise in inflation in July in the Consumer Prices Index (CPI) measure of inflation (CPM) measures corresponds to a rise of 3. 6% in the year to June. According to the Bank's most recent estimates, inflation is forecast to reach 4% in September.

The significant increase of 30 was cited by ONS chief economist Grant Fitzner, according to ONS Chief Econom Grant The biggest increase for that period since monthly figures were collected in 2001 was 2% in air fares between June and July. It was

probably due to the dates of this year's school holidays,

he said. This year, the ONS data collection day coincided with the start of the school holidays in a way that they didn't last year. Compared to a drop this time last year, the price of petrol and diesel had also increased, according to the entrepreneur. The cost of food and non-alcoholic beverages increased by 4. 4 percent. The year ended with 9% in the year to July, up from 4. 5% in the year to June. It was the fourth month in a row in which food and drink inflation had risen, pushing prices to their highest level since February 2024.

The weekly trip to the local supermarket was AJ Bell's head of financial analysis, Danni Hewson. The majority of us have the most accurate estimate of our spending habits. "With UK farmers predicting the consequences of a dry summer on food production, many households are concerned that this will take a long time before these higher prices fade.

'Cost of my weekly shop has gone up so much'

Michelle Birkenhead's finances are stretching as food and fuel prices rise. But she claims that budgeting for her family has been the key to balancing her money and planning ahead for social activities. It's so expensive, says Michelle.

It's gone up so much, it's ridiculous. What used to cost us, two years ago, was a weekly shop worth £100. You're looking at £150. The Retail Price Index (RPI), another measure of inflation, increased to 4. 4 percent. Year-round, the year to July, up from 4. 4% in June. In that it includes items such as mortgage interest payments and building insurance, RPI differs from CPI in that it does not include CPI. It is also used to determine forthcoming train fares in England. The price of rail fares has risen by 4% this year. In July 2024, 6% was one percentage point higher than RPI, implying that if the same pattern was followed, fares in 2026 would rise by 5. 8%. However, the Department of Transport has confirmed that no decisions on next year's airfares have been made

but our aim is that prices balance affordability for both passengers and taxpayers.

'Close call' on rate cut

When determining what to do about interest rates, policy makers at the Bank of England take into account inflation and other economic factors. They barely voted to lower rates to 4% earlier this month, down from 4. The unemployment rate in the United States has hit their lowest level in more than two years, with 25% down to their lowest point in more then According to Monica George Michail, associate economist at the National Institute of Economic and Social Research, some of inflation's recent factors have been one-off policy revisions. The National Living Wage increase in April and the increase in employers' National Insurance Contributions were among the changes.

The Bank faces a difficult balancing act between lowering inflation and raising a sluggish economy,

she said. Although Niesr expects one more rate cut this year, Ms Michail said the Bank will have to be remain vigilant if food prices remain high. Ruth Gregory, deputy chief economist at Capital Economics, said that although she also wants a rate cut in November, the decision

will be a close call and will depend on the results released over the next few months. In September, inflation is expected to hit 4%, which would not normally lead to further interest rate cuts. However, the economy has been struggling to grow, while the job market is unstable, which would normally encourage the Bank to cut rates to encourage hiring. Governor Andrew Bailey of Bank of England told the BBC that this month's decision to cut rates had been

finely balancedand that the future course of interest rates wasa bit more uncertain. Interest rates are still on a downward trend, he said. However, any future rate cuts must be made gradually and precisely. Chancellor Rachel Reeves said the government hadtaken the steps necessary to stabilize the public budget, and we're a long way from the double-digit inflation we saw under previous governments. But she continued, There's more to do to reduce the cost of living.The news on inflation was deeply troubling for families,shadow chancellor Mel Stride said.Labour's choices to tax jobs and ramp up borrowing are raising prices and raising inflation, raising inflation and raising prices, which is also raising inflation,

boosting inflation, making everyday essentials more costly.

Increasing inflation was

grim news for families, pensioners, and businesses still struggling with the cost-of-living crisis,

Liberal Democrat treasury spokesperson Daisy Cooper said. The chancellor, according to her, must take far bolder action beginning with the Liberal Democrat platform to halve energy bills by 2035.