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Inflation rates UK: Price rises continue to hit families | City & Business | Finance

Office for National Statistics figures are tipped to record that inflation, as measured by the Consumer Prices Index, rose by 0.1 percentage points to 2.7 per cent in July. 

Since October 2015, inflation has surged from -0.1 per cent and in May hit a five-year high of 2.9 per cent. 

It then surprised markets by slipping back to 2.6 per cent the following month on the back of lower petrol prices. 

While inflation is forecast to rise again, it is thought ONS data on Wednesday will show that wage growth has stalled at 1.8 per cent. 

Economists warn that with inflation set to climb further, due to energy price hikes, rising food costs and stagnant wages, the squeeze on living standards will continue. 

Investec chief economist Philip Shaw said: “Inflation has not reached its peak yet, we think CPI will hit 3 per cent in the next two to three months.

“It’s fairly well documented that EDF has increased its energy prices, which will feed into the numbers, while food-price inflation is accelerating. The squeeze on incomes is still on.” 

Capital Economics UK economist Ruth Gregory said: “This week’s inflation and labour market figures are likely to reveal that the real pay squeeze intensified in June.” 

The ONS economic data is also expected to show that the unemployment rate remained steady at 4.5 per cent, its lowest level since July 1975. 

On Thursday, the ONS is also tipped to reveal that the 0.6 per cent rise in retail sales seen in June tailed off sharply in July, up just 0.2 per cent. Bad weather is thought to have deterred shoppers from hitting the High Street. 

Consumer spending helped power the British economy out of the last recession and has been the main driver of growth. 

However economists expect that it will fade as household finances are further squeezed.

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