Rachel Reeves hits out at 'decade of Tory mismanagement' as inflation hits 9.4%

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation rose to 9.4% in June, up from 9.1% in May.

This remains the highest level since February 1982 and heaps yet further cost pain on cash-strapped households and businesses.

Grant Fitzner, chief economist at the ONS, said: “Annual inflation again rose to stand at its highest rate for over 40 years.

“The increase was driven by rising fuel and food prices; these were only slightly offset by falling second-hand car prices.”

Rachel Reeves MP, Labour's Shadow Chancellor of the Exchequer and MP for Leeds West, said: "The cost of living crisis is leaving families more worried every day, but all we get from the Tories is chaos, distraction and unfunded fantasy economics.

“Rising inflation may be pushing family finances to the brink, but the low wage spiral facing so many in Britain isn’t new.

"It’s the result of a decade of Tory mismanagement of our economy meaning living standards and real wages have failed to grow.

"We need more than sticking plasters to get us back on course - we need a stronger, and more secure economy.

"Only a Labour government will build the high wage, high growth, low and stable inflation economy we deserve."

Simon Clarke, the Chief Secretary to the Treasury, said the latest inflation figures were “very fractionally higher” than had been expected.

Mr Clarke told Times Radio that the latest figures would “broadly confirm what we think – which is that we have got a serious inflation challenge at present which we anticipate will persist for the rest of 2022 before coming down in 2023”.

“That is why of course we put in place a very strong package of support worth some £37 billion designed to help families with this very serious squeeze on incomes.

“And it’s something which obviously we will continue to monitor in conjunction with the Bank of England to make sure that we take the right action, both as a Government but obviously in their case as the central bank, to bring this back under control as quickly as possible.”

Newly appointed Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey have both pledged to get inflation under control.

Mr Zahawi said: “Countries around the world are battling higher prices and I know how difficult that is for people right here in the UK, so we are working alongside the Bank of England to bear down on inflation.”

In a speech in London on Tuesday evening, Mr Bailey said a bigger interest rate rise will be one of the options being mooted at the next meeting of the Bank of England’s decision-makers.

He said a 50 basis percentage point rise – which would take rates from 1.25% to 1.75% – is on the table as part of its vow to “act forcefully” if inflation shows signs of becoming embedded in the economy.

The latest ONS data revealed that the cost of motor fuels jumped by 42.3% in the 12 months to June – the biggest leap since records began.

Average petrol prices stood at 184p a litre last month, up 18.1p since May alone, while diesel raced 12.7p higher to 192.4p a litre, which was also a record.

Britons are also being hit by sharply higher grocery bills, with food and non-alcoholic drink prices having risen by 9.8% in the year to June 2022 – the highest rate since March 2009.

Food prices lifted 1.2% month on month in June, which follows similar increases in April and May as higher cost pressures and the impact of the Ukraine war filter down to the supermarket shelves.

The ONS said the largest upward effect came from essentials such as milk, cheese and eggs, but big price rises were also seen for vegetables, meat and other food products, such as ready meals.

It comes on top of eye-watering gas and electricity tariff increases, with the annual inflation rate standing at a record 70.2% and with further rises to come.

Ofcom’s next review of the energy price cap is expected to push inflation above 11% in the autumn.

Torsten Bell, chief executive of living standards at think tank the Resolution Foundation, said it is a “disaster for poorer households” to see food prices rising faster than the wider inflation rate.

But he added that soaring petrol prices are also hitting wealthier families.

The ONS figures also show that the CPIH, which includes owner-occupiers’ housing costs and is the ONS’s preferred measure of inflation, rose by 8.2% in June, up from 7.9% in May.

The Retail Prices Index (RPI) rose from 11.7% in May to 11.8% in June.

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