Inflation hits 9.4% as food and petrol prices soar – what it means for your finances

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INFLATION has jumped once more to a high of 9.4% as household budgets are squeezed even tighter amid a cost of living crisis.

It means the consumer price index (CPI) measure of inflation has hit a fresh 40-year high for June, up from 9.1% in May.

Rates are now at the highest level since 1982 according to the latest Office for National Statistics figures, piling pressure on the nation’s finances.

Experts have warned inflation will only keep rising, as the Bank of England said inflation could hit 11% this year.

Inflation is a measure of how the price of goods and services have changed over the past year.

When it goes up, prices on everyday items and essentials and bills also rise – which means budgets are being squeezed.

Soaring food and petrol prices were the main driver behind the latest inflation figures from the Office for National Statistics (ONS).

Food prices and non-alcoholic drinks jumped 9.8% in the year to June – the highest rate seen since March 2009.

Milk, eggs and cheese saw some of the biggest price hikes, as well as vegetables, meat and ready meals.

A pint of milk now costs 55p, up from 42p a year ago, with bread up 9.7% and pasta 15.9%.

A beef roasting joints now averages at £11.31 per kilogram, and pork sausages £5.81 for the same weight.

While fuel prices rocketed by an eye-watering 42.3% over the same period- the biggest jump recorded since 1989.

Furniture prices are also up 15%, and garden sets like tables and sofa sets are up one quarter.

According to the ONS, average petrol prices stood at 184.0 pence per litre in June 2022, compared with 129.7 pence per litre a year earlier.

And new cars cost 7% more than they did a year ago.

Commenting on the latest figures, Chancellor Nadhim 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.”

But experts warned rocketing rates will only continue, deepening the crippling cost of living crisis for millions.

Confederation of British Industry chief economist Anna Leach said rising inflation is “severely eating into strained household incomes”.

While abrdn client director Colin Dyer said the nation’s finances could be “strained for the sometime”, with the amount of spare cash households have leftover at the end of the month “shrinking at some rate”.

Food and fuel price rises are not the only bills spiralling – energy costs are expected to hit £3,000 by the end of the year.

While households are seeing transport and housing costs hike too.

What does inflation mean for my finances?

Rising inflation indicates that the cost of goods and services is rising, so your money won’t stretch as far as it once did.

As inflation has hit a fresh 40 year high, it means many households are seeing prices rise faster than in living memory.

The cost of everything from energy bills to groceries, petrol and clothing is going up.

At the same time, wage increases are failing to keep pace with inflation which is why experts talk about people suffering a “real terms” pay cut, because their salary isn’t keeping up with the cost of living.

Usually, experts advise making sure you money is in a high interest savings account when inflation soars, so your balance can grow in line with rising prices.

The Bank of England has hiked interest rates for a fifth consecutive time, at 1.25%.

But they are still very low by historical standards meaning savings accounts can’t keep up with inflation either.

What can I do to battle inflation?

If you’re struggling to make ends meet, our Squeeze Team is a panel of experts full of tips and advice to help you cut costs.

Shopping around for insurance, buying own-brand where possible, and using cashback sites are just some of their recent recommendations.

See what help is available that you may be eligible for.

Ex-Chancellor Rishi Sunak announced an emergency package of measures recently including £400 energy bill rebate for every household, an extra £650 for millions on benefits, and a £300 winter payment for older people.

You can also apply for help through your local council’s Household Support Fund.

Some are giving out free cash or supermarket vouchers, while others offer help with housing costs or energy bills – but help on offer varies depending on where you live.

If you’re struggling with soaring energy bills, a number of energy firms have hardship funds which offer grants of up to £750 for those struggling with their bills.

Low income families with young children could be entitled to Healthy start vouchers to help you cover the cost of fresh food and drink for your kids – they’re worth £221 a year per child.

And use a benefits calculator to see you’re entitled to help – there’s an estimated £13billion in unclaimed benefits you may be missing out on.

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