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Live Reporting

Edited by Nathan Williams

All times stated are UK

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  1. Thanks for joining us

    Thank you for following today's live coverage of the UK inflation rate and cost of living.

    Today's coverage was brought to you by George Wright, Marita Moloney, Jen Meierhans, James Fitzgerald, Rachel Russell, Nathan Williams and Jasmine Taylor-Coleman.

    You can continue to follow the story here.

  2. What's been happening today?

    We'll be pausing our live coverage of the latest UK rate of inflation figures shortly. Here's a reminder of what happened today:

    • Inflation in the UK hit a 40-year high of 10.1% in July, according to the Office for National Statistics (ONS)
    • The figure, up from 9.4% in June, is a higher rate than analysts had predicted and the first time inflation is in double digits since 1982
    • Food and non-alcoholic drinks were the largest contributors to rising prices last month, with energy, petrol and diesel costs also affecting inflation
    • It is expected that inflation will rise again in October when higher energy bills hit, with the Bank of England forecasting a potential peak of 13.3% this autumn
    • Chancellor Nadhim Zahawi said while there were "no easy options", the Treasury was preparing "all the options" on additional support for households ready for the incoming prime minister
    • But Labour accused the Conservatives of "ignoring the scale of this crisis", with Shadow Chancellor Rachel Reeves saying her party's plan to freeze the energy price cap will bring inflation down this winter
  3. A return to cash?

    When the Covid pandemic hit, many of us turned away from coins and notes to limit the spread of the virus.

    But as prices have risen, it seems people want to keep their spending under control by using cash instead of their bank cards or online payments.

    Post offices handled £801m in personal cash withdrawals in July, the most since records began five years ago.

    That's up more than 20% from a year earlier. Natalie Ceeney, chair of the Cash Action Group, said it showed people are "literally counting the pennies" as they grapple with rising prices.

    "It's absolutely because of the cost of living crisis," said Ceeney, who chaired the government's independent Access to Cash review.

    "People will be taking out cash and physically putting it into pots, saying 'this is what I have for bills, this is what I have for food, and this is what's left'."

  4. Chancellor says 'no easy options' on cost of living

    Zahawi

    Nadhim Zahawi, the Chancellor of the Exchequer, says that there are "no easy options" for the government in the face of soaring inflation.

    On the day that inflation hit 10.1%, Zahawi tells the BBC that the high energy prices being experienced in the UK are down to "Putin deliberately using energy as a tool to get back at us for the help that we are putting into Ukraine".

    While the Bank of England's governor has also said Russia's invasion of Ukraine is the largest contributor to UK inflation, economists say there are many contributing factors including supply chain issues and recruitment challenges.

    Meanwhile, Zahawi says that the Treasury is preparing "all the options" for the incoming prime minister on 5 September - but adds that he is also preparing plans for a further price cap increase in January.

    "We leave no stone unturned; we are looking at every option to be ready for 5 September for additional support.

    "My message is ... whether they are small businesses or families who are really struggling, really worried, is that we will be ready for more support as the new prime minister comes in.

    "We are working night and day to make this work."

  5. Government urged to 'improve terms of Brexit deal' to help inflation

    Labour MP Hilary Benn, who is also co-convener of the cross party UK Trade and Business Commission, has warned the government's Brexit deal may also be to blame for the increased prices.

    He urged the government to improve the terms of the Brexit deal to "remove these artificial barriers to trade and allow for the easier movement of labour to and from the UK".

    He said: “Inflation is clearly a global problem but the UK is experiencing one of the highest rates of inflation among other comparable economies, almost twice as high as France and around four times that of Japan.

    “The UK is the only G7 country dealing with the added pressures caused by the government’s Brexit deal, which has increased costs for businesses and contributed to labour shortages, in turn driving up prices for consumers even further."

  6. How do Truss and Sunak plan to deal with the crisis?

    Truss and Sunak

    Next month we will find out who will take over from Boris Johnson as prime minister.

    Right now Liz Truss and Rishi Sunak are taking part in a hustings with Tory members in Belfast, which we are also covering live here.

    But what are their plans for dealing with the cost of living crisis?

    Liz Truss

    • Plans an emergency budget to set out measures that would get the economy growing in order to fund public services and the NHS
    • Says she will tackle the crisis by putting money back into people’s pockets, such as by immediately reversing the National Insurance rise
    • Would suspend what is known as the “green levy” - part of your energy bill that pays for social and green projects
    • Promises to change taxes to make it easier for people to stay at home to care for children or elderly relatives
    • Supporters say she is also not ruling out offering further help
    • Says the Bank of England needs to do more to tackle inflation, arguing "we haven't been tough enough on the monetary supply" during a leadership debate

    Rishi Sunak

    • Says getting control of inflation - the rate at which prices are rising - is the most pressing issue
    • Promises to focus on employment by making sure people have the skills they need for better paid jobs and to tighten rules on out-of-work benefits
    • Says the long-term solution to heating bills is improving insulation in people's homes and getting people the support to pay for that
    • Pledges to scrap 5% VAT rate on household energy for one year if the price cap on bills rises above £3,000 for the typical household
    • Promises more money to help with energy bills depending on the extent of price rises to be announced later this month, which will be paid for by government "efficiency savings"
    • As chancellor announced an “Energy Profits Levy” – a windfall tax for energy firms - to pay for support for pensioners, low-income households and people who get disability benefits
    • All households were also given a £400 grant for energy bills in addition to £150 council tax rebate previously announced
  7. How to save money in the kitchen

    Stock photo

    If you're looking for ways to reduce the amount of energy you use while cooking in the kitchen, here are some tips we've put together from the Energy Saving Trust and energy companies:

    • Consider which appliance you're using to cook. Microwaves, for instance, use far less energy to cook food than an oven does. Slow cookers also use much less energy
    • Keep the oven door shut. Try not to open the door repeatedly during cooking as your oven loses masses of heat
    • Cover your pans when cooking on the hob. Covering a pan of boiling water will mean you use less time and energy heating it
    • Turn your oven off 10 minutes before the end of your cooking time - the oven will still cook your food
    • Try batch cooking bigger portions. You can then freeze the meals and defrost them as you please rather than using lots of different appliances throughout the week
    • Only use as much water as you need when boiling the kettle - it'll save you money and time
    • Turn off appliances you're not using at the mains. Anything plugged in - like a microwave or washing machine - is eating up electricity, even when they're not being used
  8. Health chief urges people to keep fridges on

    A man holds open a fridge door

    People are being urged not to turn off their fridges in order to save money on their fuel bills.

    Dame Jenny Harries, the chief executive of the UK Health Security Agency, says she has heard of households doing this to cut down on costs but warned it creates the risk of infection in food.

    Speaking to BBC Radio 4's Today programme, the health chief also said that people should try and keep the heating as energy prices rise this autumn, "particularly those at the extreme ages of life".

    "I think one of the important things here is people recognise the importance of spending what will likely be for many people very limited resource on heating, because that is an essential part of their health," she said.

  9. When will inflation go down?

    The inflation rate of 10.1% announced today is higher than analysts expected and won't be the last cost of living increase we see this year.

    Earlier this month, the Bank of England predicted that Consumer Prices Index (CPI) inflation would hit 13.3% in October as energy bills soar.

    But the recent CPI figures have outstripped predictions. The Bank's forecast for July inflation was below what the Office for National Statistics (ONS) measured across the month by 0.2 percentage points.

    James Smith, research director at independent think-tank the Resolution Foundation, adds that it will take "many months, and much more living-standards pain, before inflation starts to ease".

    Some analysts expect inflation to push higher into the winter, with Pwc economist Jake Finney stating it will peak in January 2023 instead of October.

    While Yael Selfin, chief economist at KPMG, says inflation will hit "around 13% in October" before it "gradually eases" from early next year, followed by a "substantial" decrease from autumn 2023.

    Graphic showing the Bank of England's inflation projections
  10. Millions could face 'winter of despair', says charity

    An elderly woman holding a gas bill in front of heating radiator

    As the cost of living continues to rise, Citizens Advice is warning that one in four people in the UK won’t be able to pay their energy bills in October based on current forecasts.

    Of those who won’t be able to pay in October, 68% have a household income of less than £30,000.

    Some 3.2 million disabled people and 4.4 million families with children won't be able to afford autumn’s predicted rise in energy bills and will end up almost £100-a-month in the red, the charity adds.

    Citizens Advice says its advice takes into account the energy rebate and cost-of-living payments already being offered by the government, showing that increasing costs are outstripping support.

    It is calling for further interventions from government, as well as asking energy regulator Ofgem to ensure people are protected from the most serious consequences of falling into arrears.

    The organisation's CEO Dame Clare Moriarty says there is a risk of "a winter of despair for millions" if further support is not provided by government.

  11. 'Government help is not touching the sides'

    Fiona Trott

    Reporting from Newcastle

    Carole Rowland

    More than 150 people have arrived at a building in Newcastle to get help and advice about the cost of living. It's run by the West End Foodbank who are having to buy food themselves, because donors tell them it’s now too expensive to give away.

    Carole Rowland, the welfare manager, says: "We see people in full-time work with mortgages, who are broken. They can’t cope.

    "Everyone is just trying to make their way in life. Government help is not touching the sides. We need a review of Universal Credit so that people can keep up."

    This foodbank is believed to be the biggest in the UK. It's receiving around 7 tonnes of food per month, but needs 20 tonnes because of increasing demand.

    Carole says: "Before the pandemic, we had two foodbanks in Newcastle. We now have eight across the city and we run 11 sessions a week."

  12. 'Poorer families will continue to be hardest hit'

    UK-wide inflation hit 10.1% in July but the poorest tenth of households faced an inflation rate of 10.9%, according to the Resolution Foundation.

    Meanwhile the richest tenth also saw their cost of living rise significantly, but only 9.4%.

    James Smith, research director at the foundation, said: "Inflation has hit double digits earlier than expected off the back of the highest food price inflation in over two decades, and is set to continue climbing as energy bills soar this winter."

    "It will take many months, and much more living standards pain, before inflation starts to ease," Smith adds.

    "So, the number one priority for the next prime minister will be to offer significant support to help millions of families through a brutal winter and beyond."

  13. How much are prices rising for you?

    Personal inflation calculator

    The price rises we experience depend on what we spend our money on and some readers have been using our personal inflation calculator, built by the Office for National Statistics (ONS) to find out theirs.

    Viv got a figure of 10.7% - "pretty much what I expected, sadly," she says.

    "Fuel bills accounted for 30%, though I have been using my car much less. The rises in household fuel costs in October will punish us severely... It's very worrying and the picture is grim."

    Keith says: "I found my calculated inflation rate slightly less than I had expected."

    "I am an 83 year old slightly disabled man. I live alone and rely on care workers.

    "About half of my income is index-linked, but past experience suggests that in practice this rarely compensates for real price increases.

    "The rest of my income depends on investments, and I think it likely that I shall need to encroach more and more on the capital in order to maintain my present standard of living."

    You can try our personal inflation calculator here.

    If you want to let us know what you find out about your own inflation, you can email us: haveyoursay@bbc.co.uk or WhatsApp +44 7756 165803

  14. What do experts think will happen next?

    Inflation is expected to fall back a little this month, but it could soar to 13.3% in October when the energy price cap rises again, according to estimates.

    The Bank of England thinks this could push the UK into a recession - when the economy shrinks for two three-month periods in a row.

    Whether or not the Bank's October prediction proves true remains to be seen.

    Its forecast for July's inflation rate was 9.9%, 0.2 percentage points lower than where the ONS has now measured it.

    Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the difference between the Bank's forecast and the measurement is mainly down to surging food prices.

    Meanwhile, the energy price cap will reach close to £3,640 in October, up from £1,971 at the moment, according to the most recent estimates by experts.

    Then energy prices are expected to rise even further.

    Energy consultancy Auxilione said that at today's prices the cap might rise to £4,722 in January before hitting £5,601 in April.

  15. 'Government needs to act now to help small businesses'

    Stefan Jajecznyk

    Producer, BBC Breakfast

    Raj Kandola

    We've been chatting to business leaders at Birmingham's wholesale market about how record inflation is affecting them.

    Raj Kandola, head of policy at Greater Birmingham Chambers of Commerce, says companies are under pressure to raise their prices due to higher costs for fuel, energy and raw materials.

    "The next few months are absolutely crucial, those margins are getting absolutely squeezed," he says.

    "That's why we are calling on the government to act now and help alleviate these huge cost pressures firms are facing right now.

    "Many small businesses incurred huge debts in the pandemic which they are struggling to repay and now the cost of living crisis is adding to that pressure right now.

    "So whether it's financial support for those in energy intensive industries, potentially looking at a price cap for smaller firms or even removing VAT from energy bills as well, I think all of those measures would help in the short term."

  16. Just joining us?

    Here's a recap on the latest developments in the cost of living crisis.

    • The UK inflation rate has hit 10.1% - the Office for National Statistics says
    • The last time the Consumer Price Index - which measures price rises - was in double digits was in February 1982 when it reached 10.2%
    • Food and non-alcoholic beverages saw an overall increase of 2.3% between June and July 2022
    • Bread, cereals, milk, cheese and eggs had a particular impact on rising prices
    • The poorest fifth of households could face inflation of 18%, because they spend a larger proportion of their budgets on energy and food, the Institute of Fiscal Studies has warned
  17. Analysis

    Highest inflation since the tail end of 1970s stagflation

    Robert Cuffe

    BBC head of statistics

    Today’s inflation figure is estimated to be the highest since early 1982.

    That's actually about 20 years before we started using the current measure of price rises for households - the Consumer Price Index.

    Thankfully, the Office for National Statistics went back and worked out how it might have looked in years gone by.

    And, using those figures, you can see in this chart just how exceptional this current bout of inflation really is.

    Inflation chart
  18. What is inflation?

    Milk

    We've been talking about the rise in the rate of inflation - but what is it?

    Inflation is the increase in the price of something over time.

    For example, if a bottle of milk costs £1 and that rises by 5p compared with a year earlier, then milk inflation is 5%.

    Every month a figure is released, estimating how much prices are rising overall - the latest ONS data shows it has hit 10.1%.

    The Bank of England has warned that inflation could reach 13% and has predicted a recession by the end of the year.

  19. 'There's nobody trying to help us'

    Stefan Jajecznyk

    Producer, BBC Breakfast

    Leroy Howes

    In Birmingham's wholesale market, one trader tells us rising prices mean he can't plan from one week to the next and he does not feel there is any support.

    Leroy Howe, of Howe's Exports says: "The price of fuel keeps going up so suppliers keep putting up the prices so what we find happening is that one week we'll be charged this price and the next week we'll be charged a higher price."

    He says his biggest concern is the drop on footfall as customers cut back on spending.

    "The amount of people that used to come through this market aren't coming through anymore so that is quite worrying," he says.

    He feels that traders like him are being "left to our own devices" and "aren't getting any support from anywhere."

    "There's nobody trying to help us we are just trying to survive as trader in this market off our own back really," he says.

  20. Analysis

    Latest hike in inflation down to food and drink prices

    Robert Cuffe

    BBC head of statistics

    Despite all the talk about the energy price cap being set to rise above £3,000, energy costs haven’t contributed that much directly to the latest hike in consumer inflation.

    This spring’s price cap rise hit the figures in April and pushed inflation up to 9%.

    The next price cap rise - expected to take prices past £3,000 for the average household - won’t be felt until after it’s announced at the end of the month.

    So it's other things that have pushed inflation from those levels up into double digits.

    In the latest month, that's record increases in food and drink prices we've been describing further down in the page.