U.K. inflation accelerated more than expected in July to the highest level in 40 years, intensifying a squeeze on consumers and adding to pressure for action from the government and Bank of England.
The Office for National Statistics said that the Consumer Prices Index rose 10.1% in July from a year earlier after a 9.4% gain the month before.
The reading was higher than expected by the Bank of England and private-sector economists. Economists' forecasts in a Reuters poll for inflation were to rise to 9.8% in July.
Rising food prices contributed the most to the month's increase, indicating inflationary pressures are spreading beyond energy.
Core inflation -- excluding energy, food, alcohol, and tobacco -- accelerated to 6.2%, increasing from 5.8% in June.
The Bank of England earlier this month raised its key interest rate by 0.5% to 1.75% - its first half-point rise since 1995. Its forecast inflation would peak at 13.3% in October, writes Reuters.
Data from the Office for National Statistics showed that prices rose 0.6% in July from June on a non-seasonally adjusted basis. The annual rate of retail price inflation hit 12.3%, its highest since March 1981.