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Red-hot inflation is suffocating the UK economy, ICAEW warns, as latest figures released

Author: ICAEW

Published: 17 Aug 2022

Responding to the UK inflation figures for July 2022, released by the Office for National Statistics today (Wednesday 17 August 2022), Suren Thiru, Economics Director for ICAEW, said:

“Red-hot inflation is suffocating the UK economy, and with the peak some way off, the risk of recession is rising.

“The latest increase means that the cost-of-living crisis is escalating as inflation continues to outstrip pay growth, eroding people’s incomes. Companies’ ability to operate is also under significant pressure as they see their own costs surge and customer demand wilt.

“Inflation may moderate a little in August as strong base effects caused by the comparison with August 2021, when inflation leaped from 2.0% to 3.2%, impacts the calculation. However, with eye-watering increases in energy bills due from October, inflation is on track to peak at over 13%.

“With inflation soaring, another half-point interest rate rise in September is very much on the table. However, with the looming recession likely to help bring down inflation, the case for continuing to tighten monetary policy should diminish.”