The inflation rate has increased, reaching 2.2% in July 2024 due to rising utility costs.
- The Consumer Prices Index (CPI) reflects a notable increase from the previous month, achieving a 2.2% rise.
- Gas and electricity prices have been identified as key factors contributing to this inflation surge.
- Clothing and footwear prices also saw an increase, counterbalanced by a decrease in sportswear prices.
- Retailers face potential business rate challenges as inflation impacts the economy.
The Annual Consumer Prices Index (CPI) indicates a rise in inflation to 2.2% in July 2024, as reported by the Office for National Statistics (ONS). This figure marks an increase from the Bank of England’s target of 2% achieved in June. The upward trend in inflation is attributed predominantly to utilities, specifically gas and electricity, where price reductions were less significant than those observed last year.
The broader Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.1% for the same period, up from 2.8% in June. This reinforces the impact of utility costs on household expenses.
Additional contributions to the inflation rise were observed in the clothing and footwear sector, which experienced a 2% price increase in July, up from 1.6% in June. However, these increases were somewhat mitigated by falling prices in the sportswear segment.
Kris Hamer, British Retail Consortium’s director of insight, noted the challenges retailers may face with potential increases in business rates, as these are linked to inflation rates in September. Hamer pointed out that retail products have low inflation compared to the overall rates, creating an imbalance in business rate calculations.
The call for the government to address these business rate rises, especially those impacting high street stores, highlights the broader economic implications of the inflation increase. Ongoing increases in business rates, which have risen by a third since 2010, continue to challenge the retail sector’s viability.
The inflation increase in July underscores the intricate balance between utility costs and their broader economic impacts.
