The ONS’s Consumer Price Index inflation figure has risen by 0.2 percentage points since June, pushing the rise in the cost of living even further.
At 4.4 per cent, UK inflation continues to remain more than double the Bank of England target of two per cent, and has been above this level since December 2009. Economists expect inflation to remain above target throughout 2012, with many even expecting it to reach five per cent later this year.
The increased rate of inflation continues to be led by rising food costs, which grew by 6.2 per cent in July, while clothes prices increased by 3.1 per cent the highest since records began in 1997.
“This will largely be blamed on the spectacularly turbulent market conditions which we saw last week, and any consequent forecasting for the UK’s economy must now take these factors into account,” says Rick Roache, senior dealer at currency brokers World First.
“This figure will support the pound slightly, as increased inflation may bring forward interest rate expectations, which are currently not pricing in a hike until 2013.”
Meanwhile, Retail Price Inflation (which includes mortgage costs) remained unchanged at five per cent in July, according to the ONS.