Inflation hits double figures

17 August 2022

In the latest consumer price inflation report from the Office for National Statistics (ONS) it is confirmed the Consumer Price Index (CPI) has now reached 10.1%.

Driven by rising food prices, the CPI figure is higher than it has been since CPI was used in the national statistics series, but models suggest it would last have been higher 40 years ago.

The Bank of England is tasked with keeping inflation to a targeted 2%. To achieve this, interest rates are set, currently at 1.75%, due to be reviewed on 15 September 2022. It is likely that further increases to the bank rate will need to be considered as inflation continues to climb.

The repayment interest rate Her Majesty’s Revenue and Customs (HMRC) set is determined by the bank rate minus 1%, with a lower limit of 0.5%. This lower limit has now been breached, therefore any further rises will also affect HMRC’s repayment interest rates.

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