UK gas prices soared by nearly a third in the last week of July, reaching the highest average cost since mid-March, according to newly released official data.
Gas prices rose 31% in the week to 31 July, the Office for National Statistics (ONS) said on Thursday.
Also on Thursday, the UK’s central bank, the Bank of England, raised its key interest rate by 50 basis points to 1.75%. This is his biggest rate hike in 27 years.
soaring energy prices
Energy prices have risen significantly in recent months following Russia’s invasion of Ukraine on February 24, with prices soaring by two-thirds in the first week of March.
Auto fuel costs for the week ending July 31 increased by 9% compared to the previous week. It also increased by 54% year-over-year, more than doubling his average spending in February 2020 before the COVID-19 pandemic hit.
Fuel prices reached all-time highs earlier this summer. But major retailers have failed to bring gasoline prices down in line with lower wholesale costs of unleaded petrol over the past two months, the auto industry group said this week.
At a press conference after the interest rate hike, Bank of England Governor Andrew Bailey underscored the impact of high energy costs on the economy as a whole.
He said a “further sharp rise in energy prices” was the biggest development in recent months.
“Wholesale gas futures prices at the end of the year … have nearly doubled since May,” he said, adding that they were “nearly seven times higher” than projected a year ago.
“This is overwhelmingly a result of Russia’s restrictions on gas supplies to Europe and the risk of further cuts,” he said.
The Monetary Policy Committee (MPC), the bank’s rate-setting body, said inflationary pressures in the UK and other European countries had “increased significantly” since its last policy report in May.
The MPC said it expects near-term inflation to be higher than previously forecast, hoping that higher wholesale energy prices will be reflected in retail energy prices.
Rising gas prices are expected to push consumer price index (CPI) inflation to 13.3% in October, the highest level in more than 42 years.
Tom Ozimek and PA Media contributed to this report.