By Geoffrey Smith
Investing.com -- Annual inflation in the U.K. topped 10% with another forecast-busting increase in prices in July.
Consumer prices rose 0.6% from June, leaving them up 10.1% from a year earlier. That's the highest rate of inflation since early 1982. Retail price inflation, which includes housing costs, rose by 0.9% to an eye-watering 12.3%.
The monthly rise in prices was slightly less than in June, owing to a slight easing in petrol prices during the month. However, it was still more than the 0.4% consensus forecast.
Producer prices also rose by more than expected, gaining 1.6% on the month to hit a new high of 17.1% in annual terms.
The pound rose initially in response but soon reversed to trade at $1.2105, up only 0.1% on the day and below where it was before the data.
The impact of high energy and food prices remained the key driver behind developments, with food contributing over half of the 0.6% rise. That is consistent with reports of poor harvests for seasonal foods due to drought and labor shortages in the agricultural sector.
Excluding energy, food, alcohol, and tobacco, prices rose a more modest 6.2%. However, services prices accelerated again, rising 5.7% from a year earlier.
Simon French, chief economist with Panmure Gordon, noted via Twitter that the U.K.'s inflation rate is now more than 2 percentage points above the average for G20 countries - the most since 1992. While the monthly change in prices was the slowest since January, he noted that prices typically don't rise at all in July.