UK inflation: what is current 2024 inflation rate, what does rise news mean for consumers - meaning explained

Watch more of our videos on ShotsTV.com 
and on Freeview 262 or Freely 565
Visit Shots! now
Inflation’s rise to 2.2% could impacting your budget in a number of ways 📈
  • Inflation rose 2.2% in July 2024, surpassing the Bank of England's 2% target
  • It’s the first increase of the year after a period of steady declines
  • While overall inflation increased, some areas saw decreases
  • Prices for hotels and restaurants decreased between June and July, though they remained higher year-on-year
  • In contrast, inflation for alcohol and tobacco rose to 7.2%

Inflation has surpassed the Bank of England's 2% target, marking its first increase of 2024 following a period of steady decreases

According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) inflation rose to 2.2% in July, up from 2% in June.

Hide Ad
Hide Ad

This is the first rise since December, partially due to the removal of last July's significant decrease in energy bills from the annual calculations.

The latest figures indicate that prices are increasing more quickly than in recent months, though still at a slower pace compared to 2022 and 2023, when households and businesses were facing significant financial strain during the height of the cost-of-living crisis. But what exactly does it all mean for the average consumer on the street? Has anything actually become cheaper, and what does the news mean for personal finances going forward?

City workers walk past the Bank of England in London (Photo: Leon Neal/Getty Images)City workers walk past the Bank of England in London (Photo: Leon Neal/Getty Images)
City workers walk past the Bank of England in London (Photo: Leon Neal/Getty Images) | Getty Images

What is inflation?

Inflation refers to the rise in the prices of goods and services, while the inflation rate measures the speed of this increase.

With July’s inflation rate at 2.2%, an item that cost £100 a year ago would now cost £102.20.

Hide Ad
Hide Ad

This represents a slight increase from the 2% inflation rate observed in May and June, indicating that prices are rising marginally faster than they have in recent months.

The primary factor behind the increase was that the drop in energy bills wasn’t as significant this month as it was before. Grant Fitzner, chief economist at the ONS, said: “Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.”

So while energy bills did go down compared to last July, they had less of an impact on reducing overall inflation than they did in previous months.

What does it mean for prices?

Is inflation going up for everything? Not exactly. The increase we’re seeing is in the Consumer Prices Index inflation, which reflects the overall economy.

Hide Ad
Hide Ad

But inflation has decreased in some areas. For example, in the services sector - like hospitality and culture - the rate dropped to 5.2% in July, down from 5.7% in June.

That means that while prices for services are still higher compared to last July, they’re rising more slowly than they were the previous month. But has anything actually gotten cheaper?

Yes! Prices for hotels and restaurants decreased between June and July, which helped lower the overall inflation rate for services.

But despite this monthly drop, the prices for hotels and restaurants were still higher compared to last year, with an annual inflation rate of 4.9%, down from 6.3% in June.

Hide Ad
Hide Ad

Other items are still becoming more expensive. For instance, alcohol and tobacco saw inflation rise to 7.2% in July, slightly down from 7.3% in June.

Food and drink prices, excluding alcohol, remained steady at 1.5% in July, indicating a slow but ongoing increase.

Darren Jones, Chief Secretary to the Treasury, said the figures showed many families are “still struggling with the cost of living”.

What does it mean for households?

The 5.2% rate in services still indicates faster price increases in this sector compared to household goods or bills.

Hide Ad
Hide Ad

The Resolution Foundation think tank said that services inflation, which includes expenses like dining out and leisure activities, impacts wealthier households more.

On the other hand, food and utility bills, which have been central to the recent cost-of-living crisis, make up a larger portion of the budgets for lower-income households.

At the start of August, the Bank of England reduced the base interest rate to 5%, marking a quarter-point decrease. This rate influences the cost of borrowing and mortgages.

On 1 August, Governor Andrew Bailey emphasized the need for the Bank to "make sure inflation stays low,” and to avoid reducing interest rates too quickly or too drastically.

Hide Ad
Hide Ad

Maintaining a higher base interest rate is the Bank’s primary strategy for controlling inflation.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “It’s likely to be business as usual at the Bank of England in September, with rates on hold, so it’s unlikely to alter the picture significantly for savers and borrowers.”

What are your thoughts on the recent inflation changes and their impact on your personal finances? How do you feel about the Bank of England's latest interest rate decision? Share your insights in the comments section.

Comment Guidelines

National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.

News you can trust since 1917
Follow us
©National World Publishing Ltd. All rights reserved.Cookie SettingsTerms and ConditionsPrivacy notice