Grocery price inflation has hit a record 14.7 per cent to add a potential £682 to the annual cost of a basket amid warnings there is still no sign of a peak.
Sales of supermarket own-label products jumped again by 10.3 per cent over the latest four weeks and the cheapest value ranges grew by 42 per cent as shoppers sought to manage their budgets, according to Kantar.
Just over a quarter of households (27 per cent) say they are struggling financially – double the figure recorded last November, the research firm said.
Elsewhere, the Bank of England is preparing to further raise interest rates over concerns that inflation could become embedded in the British economy.
Increasing interest rates encourages people to save and not spend, which should theoretically bring prices under control.
What is inflation?
According to research, searches for ‘What is Inflation’ have increased by 115 per cent in the past year, with 1.4 million searches this month alone.
Inflation is simply the way we describe rising prices, with the higher the inflation rate, the quicker the prices go up.
Inflation is measured by the Bank of England who evaluate over 700 things that people regularly buy, including a loaf of bread, a bus ticket, a car and even a holiday.
They then compare those prices to the price level last year to find out the rate of inflation.
The current rate of inflation in the UK, as calculated by the Bank, is 10.1 per cent.
What causes inflation to go up?
There are several factors that cause inflation to rise.
Mark Carney, a former Bank of England governor, said the ongoing onslaught of rising prices is partly to do with Brexit, as it has made it harder to transport goods and recruit staff.
The pandemic is also to blame for weakening the UK’s ‘capacity to grow’ and ‘changing the labour market’, Carney continued.
Of course, the war in Eastern Europe is impacting gas and oil supplies which drive energy prices up.
Some have blamed the Bank for not rising interest rates sooner, although the geopolitical nature of the current rises throws that into doubt.
Are other countries experiencing high rates of inflation?
In a nutshell, yes.
Few western countries have been able to avoid the shadow of inflation.
In Europe, annual inflation is up to 9.9 per cent in the euro area and up to 10.9 per cent in the EU.
In America, they say it is one of the big factors behind how people will vote in the midterms.
How can it be brought down
Raising interests rates will be the first course of action.
Central banks across the World have moved to increase their numbers from record lows to between 3 per cent (UK) to between 3.75 per cent and 4 per cent in the US.
Inflation is expected to start falling in the UK towards the middle of next year (2023).