The Annual Consumer Prices Index (CPI) inflation rate increased to 2.2% in July 2024, surpassing the Bank of England’s 2% target.
- Recent data highlights a 3.1% rise in CPI including owner occupiers’ housing costs (CPIH) compared to last year.
- Utility expenses, particularly gas and electricity, are primary contributors to this inflationary change.
- Retailers face challenges as business rates correlate with rising headline inflation figures.
- A call to action has been made for the government to reconsider longstanding business rate strategies.
The latest figures, released by the Office for National Statistics (ONS), show that the Annual Consumer Prices Index (CPI) inflation rate rose to 2.2% in the year to July 2024. This rise exceeds the Bank of England’s previously achieved target of 2% in June. The ONS attributes the increase to utility costs, citing that both gas and electricity prices dropped less than they did in the prior year.
Furthermore, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) saw a notable rise to 3.1% over the same period, up from 2.8% in June 2024. This increase underlines the persisting impact of utility costs on broader economic metrics and consumer expenses.
In tandem with these inflationary pressures, clothing and footwear prices rose by 2% in the 12 months leading to July, slightly up from a 1.6% increase noted in June. However, this was somewhat mitigated by a decline in sportswear prices, which provided a counterbalance.
The British Retail Consortium, represented by Director of Insight Kris Hamer, expressed concern over potential increases in business rates, which are determined by inflation rates reported in September. Hamer stated, “With headline inflation showing signs of rising further, retailers face the prospect of another large rise in business rates next year.” This highlights the retail sector’s vulnerability given its lower inflation levels relative to the headline figures influencing business rates.
Hamer further argued that the government should review the business rates system, which has seen the multiplier increase by a third since 2010, suggesting that these sustained rates negatively impact high street store viability across the nation.
The rise in utility costs has significantly contributed to an upward trend in inflation, prompting calls for government intervention in business rate policies.
