Inf lation hits yet another 40-year high as it rises to... 9.4%

THE rise in the cost of living has surged to a new 40-year high.

A jump in the price of food and fuel pushed inflation to 9.4 per cent in June, according to the Office for National Statistics, higher than May’s 9.1 per cent and surpassing predictions of 9.3 per cent.

It leaves Britain again with the highest rate of inflation of any country in the G7 group of advanced economies.

The gloomy data comes just a day after Bank of England governor Andrew Bailey said an unusually high 0.5 percent

‘The worst is yet to come’

age point hike in interest rates was on the table next month. This would be its largest hike since 1995, and would come on the back of an unprecedented series of rate rises as the central bank desperately tries to get inflation down.

Rises in the cost of living have pushed pensioners’ real incomes – which takes higher prices into account – down by £589 over the past year. New retirees are now expected to be more than £14,000 worse off by the time they reach 85 after the Government suspended its triple-lock promise, which would have forced rises in the state pension to keep up with inflation.

Savers keeping their money in cash are also losing out – anyone with a £50,000 nest- egg is set to lose £3,999 as the rising cost of living more than wipes out any interest they receive.

And the worst is yet to come, economists warned. Inflation is expected to climb past 11 per cent in October, according to the Bank of England’s predictions, when energy regulator Ofgem lifts the price cap on household bills. Consultancy firm Capital Economics thinks it is more likely to be 12 per cent, as rises in the cost of food show no sign of slowing.

June’s rise in inflation was driven by surges in the price of food and fuel, with food jumping by 9.8 per cent in a year. Average petrol prices rose by 18.1p per litre last month.

It came as ONS figures revealed that the average house in Britain is worth £32,000 more than a year ago. The price of the average home rose by 12.8 per cent in the year to May, to £283,000, beating April’s 11.9 per cent rise over the year.