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Economic Report: U.K. consumer prices surge by 10.1% in July to highest since early 1980s

It’s not peak inflation in the U.K.

U.K. annual consumer prices surged 10.1% in July to the highest level since the 1980s amid soaring food costs, the Office for National Statistics reported Wednesday.

The jump follows an annual rise of 9.4% in June, and was higher than expectations, with economist polled by FactSet forecasting a rise of 9.8% in July. Rising food prices made the largest upward contribution to the change in annual consumer price inflation (CPI) between June and July.

But analysts said the inflationary pressure was broad based. “There were additional pressures in every major category too, illustrating the extremely broad-based nature of U.K. inflation, which is thus highly likely to be met by the Bank of England with a further 50bps hike in the bank rate next month,” said Chris Scicluna, head of research for Daiwa Capital Markets Europe.

On a monthly basis, CPI rose by 0.6% in July.

The surge in CPI marked the highest level since the National Statistics series began in 1997, officials said. But based on modeling of consumer price estimates, the CPI would have last been higher in 1982, where estimates ranged from nearly 11% in January of that year to 6.5% in December.

Expectations are that CPI will have two months of slight year-over-year declines, on the impact of falling oil prices, but then surge in October when the U.K. energy regulator increases its default tariff price cap on electricity by an expected 80%.

The yield on the 2-year gilt

shot up 16 basis points to 2.31%.

The British pound

initially shot higher on the data, but pulled back, last trading at $1.2091.

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