Image source, Sarah McCrossman

Sarah McCrossman owns a clothes stop in Daventry, Northamptonshire and is preparing for decreased footfall this winter.

"We've had a brilliant summer," she says, "people are so excited about going on holiday... after everyone's had their summer holidays, it's going to fall off a cliff."

Speaking to Radio 5 Live, she says people are currently able to justify picking up a top for their first holiday in two years, but are likely to be making "considered purchases" in the winter.

"They're going to make that winter coat and jeans last," she says, "because item prices are a lot higher."

Sarah says she plans to have a "better online presence" to help boost sales in the winter as "the cost of running an online business is substantially less than having a bricks and mortar building... it's trying to get a balance between doing the two."

One way to try to control rising prices - or inflation - is to raise interest rates.

This increases the cost of borrowing and encourages people to borrow and spend less.

It also encourages people to save more.

However, it is a tough balancing act as the Bank does not want to slow the economy too much.

Since the global financial crisis of 2008, UK interest rates have been at historically low levels. Last year, they were as low as 0.1%.

Kevin Peachey
Personal finance correspondent

The inflation figures make a rise in interest rates next month somewhat inevitable.

It is more a question of how big an increase the Bank of England will decide upon.

That will make mortgage costs more expensive for people buying a home, as it will for homeowners whose current deal is soon to expire and for those on variable deals.

Separate figures from the Office for National Statistics (ONS) today show that house prices rose by 7.8% in the year to June, on average across the UK. The fastest rise was in Scotland.

The silver lining, albeit a slim one, for potential first-time buyers was that the annual rate of increase had slowed from 12.8% in May.

Beth Timmins
BBC News

Image source, Rebecca Brown

PhD student Rebecca Brown says rising prices mean she can’t afford things she once saw as essential.

"Things like the dentist and getting my hair cut are pretty much a no-no but my parents have helped out with that when I've gotten desperate," she says.

Rebecca tops up her student loan by working part time as a researcher and waitress, and shares her living costs with her partner.

She says: "After rent and bills plus my bus fare, phone, Netflix and Spotify bills, that leaves me around £300 to £400 a month for food, fun and necessities.

"I buy basics wherever I can and cook in bulk.

"Last winter we tried to be very frugal with the heating - bundling up with dressing gowns and blankets. But that didn't stop our bills going up from £80 to £140 somehow.

"When the winter comes and electricity and gas bills go up, I honestly don't know what we'll do. I don't even have a credit card or use an overdraft, but that's probably going to have to change."

Image source, PA Media

We're not expecting ministers to announce any fresh action to tackle cost-of-living pressures before Parliament is sitting again in September.

Last week, Education Secretary James Cleverly said a measure like an emergency Budget would take time to be agreed and that a "proper scrutiny process" would be required.

He pointed to the government's existing package of measures - including a £650 cost-of-living payment for low-income households - which he called "unprecedentedly large".

Image source, Getty Images

Thousands of people have joined a call by former Prime Minister Gordon Brown for an emergency Budget.

Brown wrote in the Observer earlier this month, external that a "financial timebomb" was on its way for millions of households in the autumn.

More than 120,000 people have now signed a petition started by the campaign group 38 Degrees, which supports Brown's demand for urgent financial help for families.

Last week, Education Secretary James Cleverly said any such measure would have to wait until Parliament reconvenes in September.

Brown, a former chancellor, was PM during the financial crisis of 2008.

Kevin Peachey
Personal finance correspondent

Image source, Reuters

There is a very uneasy relationship between the rate of inflation and our savings.

Rapidly rising prices erode the value of money that has been set aside, because interest paid by banks and building societies is far outstripped by inflation.

As one analyst says this morning:

That will still be true even if the Bank of England decides on a further increase in the benchmark Bank rate next month. However, this winter will highlight why savings are vital.

The cost of energy in particular may require people to dip into the pot to pay their bills as their income falls short.

Image source, Nicola Atkinson

Nicola Atkinson is a fish and chip shop owner in Redcar, and says there is "not one item" in her storeroom that hasn't increased in price.

"You're not just talking small amounts," she says, "you are talking large amounts - margarine for example has gone from £2.50 a tub to £7 a tub."

Speaking to Radio 5 Live, she says there's "only so much we can put fish and chips up. We are trying our hardest to absorb what we can, but there's a limit".

"We need to be selling [cod and chips] at £9.30 at least to put us at the same sort of profit we had before this all escalated.

"I don't think people have that money to pay it, I don't think they've got the disposable income anymore."

Today's cost-of-living figure represents the largest gap between rich and poor inflation for over a decade.

But the Institute of Fiscal Studies is warning that the poorest fifth of households could face inflation of 18%, because they spend a larger proportion of their budgets on energy and food.

The IFS uses slightly different calculations to the ONS and its analysis, external was out before the official inflation figure this morning.

Director of the IFS, Paul Johnson tweeted:

Image source, IFS

John Glen, former treasury minister, says the 10.1% inflation figure is a "very significant concern" for the economy and people on fixed incomes.

The Tory MP says vulnerable people and pensioners in particular need to be supported, adding that Rishi Sunak, who he is backing for party leader, has pledged a £37bn cost-of-living package to do this.

"My concern is this [rising cost of living] is an immediate pressure that we need to deal with for the most vulnerable," he tells BBC Radio 4's Today programme.

Tax cuts, as proposed by leadership rival Liz Truss, will not be effective in helping people on fixed incomes or means-tested benefits, he says, adding that "funded interventions" are needed instead.

Earlier, we heard from Truss-supporter and former chancellor Sajid Javid, who said her tax-cutting proposals, as well as an emergency budget, will help mitigate the cost-of-living challenges.

Autumn will be a crucial season for a Colchester cake shop, whose owner tells the BBC she's "absolutely terrified" she may not get the custom she needs to keep the business afloat.

Kiersten George, the owner of Victoria Yum, says inflation is pushing up the costs of her ingredients, turning "economical" products like Victoria sandwiches into luxury buys.

As her prices increase, more and more customers are cutting back: opting to share cakes or save money on drinks.

As a result, Kiersten has had to shrink her team, reduce her opening hours and stop paying herself a wage for the time being.

In her emotional interview with the BBC News Channel, she says she’s “furious” that it’s proving a challenge to “save” her business. She's "exhausted" with finding ways to adapt, having been through the turmoil of Covid and now cost-of-living worries.

Image source, Getty Images

The managing director of Iceland has discussed the supermarket chain's new interest-free "microloans" scheme to help shoppers with rising inflation.

Richard Walker said the company had been trialling the scheme for 18 months.

"These are affordable microloans that are very time-limited and small amounts - anything from £25 up to £75," he tells Sky News.

Customers repay around £10 a week and there's no interest, he says.

Iceland has partnered with a charity-owned not-for-profit called Fair For You, an ethical lending provider, and they are assessing people who are struggling to make ends meet, he says.

"There's plenty of those around at the moment.

"And, if they're successful in their application, they'll get a pre-loaded Mastercard that they can spend in an Iceland shop."

Largest gap between rich and poor inflation for over a decadepublished at 10:06 British Summer Time 17 August 2022

10:06 BST 17 August 2022

Robert Cuffe
BBC head of statistics

For most of the last ten years, the richest have faced slightly higher inflation than the poorest.

The chart below shows that: the blue line for the poorest is a little bit lower. Until this year, it had been nip-and-tuck for a while, with small differences between the two groups.

But this year is different: the big drivers of price rises are food and fuel.

And the poorest spend more of their money there, so they’re being hit hardest.

You can see that on the far right hand side of the chart: their inflation has overtaken that seen by the richest.

And that gap is now the widest it has been since the financial crash at the end of the noughties, according to the ONS.

Find out your own inflation rate with our calculator, built by the ONS.

Image source, Getty Images

By far the biggest contribution to today’s 10.1% inflation figure came from food prices.

The monthly increase of over 2% between June and July is the highest seen in 20 years.

Kien Tan, director of retail strategy at PwC, says "supermarkets have had little choice but to pass on price increases from suppliers, themselves contending with unprecedented inflation in raw material and ingredient input costs.

"This has been particularly acute in labour and utility intensive categories like dairy, with reports of the price of a pint of milk having more than doubled in some stores since the start of the year."

Oliver Smith
Senior business producer, BBC News

Image source, Shaun Coole

Shaun Coole owns an independent roadside recovery firm just outside Leicester and says rising fuel prices are the hardest to manage.

"It was £3,000 a week, it's been up to £4,000 a week, which is £50,000 a year extra," he says.

"I don't even look at the bill at the end of the week now.

"I'm taking less and less in wages, to cover the costs. Most of my drivers earn more than I do," he says.

Shaun says he’s thinking of retiring and that other recovery firms are already closing or reducing services.

"You'll find a lot of cars on the side of the road now that are not being taken home because recovery operators are staying close to home and not picking them up. They wont go far, because the cost of fuel isn't worth it," he says.

Most economists didn't expect double digits yetpublished at 09:27 British Summer Time 17 August 2022

09:27 BST 17 August 2022

Andy Verity
BBC economics correspondent

While the Bank of England and others have forecast that inflation would exceed 10%, most economists didn't expect it to happen just yet - with the consensus forecast at 9.8%.

Food prices were driving up the average rise between June and July - everything from bread and cereals, up by an annual 12.4%, to milk cheese and eggs, up 19.4%, to oils and fats, up 23.4%.

The causes are familiar: the reopening of the global economy post-pandemic, which meant the supply of goods like fuel couldn't keep up with surging demand, made worse by the war in Ukraine, which further disrupted the supply of goods like gas, wheat and cooking oil.

That's led to a surge in output prices - prices of goods at the factory gate - which rose by 17.1%, faster than they have since 1977.

The figures offer just a glimmer of hope from the petrol forecourts - where prices began to fall a little in July. The rise in the prices companies pay for their raw materials also slowed down, up by a mere 22.6% - compared to 24.1% the previous month.

Image source, Getty Images

Rising costs of certain items are driving this double-digit rate of inflation, says the Office for National Statistics (ONS), the body that measures the phenomenon.

• The prices of food and soft drinks have risen notably, up 12.7% in the 12 months to July 2022, the ONS says. It calls attention to rising costs of bakery products, dairy, meat and vegetables
• Perhaps unsurprisingly, it also highlights the rising prices of meals bought in restaurants and takeaways
• Price rises for other staple items such as pet food, toilet rolls, toothbrushes and deodorants have pushed up the inflation rate as well
• And it's bad news if you're planning a trip abroad: the price of package holidays rose, driven by higher demand than last year - as did air fares and hotels

Lord Stuart Rose, chairman of Asda and a Conservative peer, says inaction in laying out plans for dealing with the inflation crisis in "horrifying".

"I think we've been very, very slow in recognising this train coming down the tunnel. It's now here, and it's not about to run us over, it's [already] run quite a lot of people over," he tells the BBC's Radio 4 Today programme.

Inflation will increase further than the 10.1% announced this morning, he predicts, and says he wants to hear more from political leaders on how to deal with the a crisis that "is not about to go away".

"Nothing is happening. We're sitting here now into the second, third, fourth month of this crisis and we’re still waiting to see what action will be taken," he says. "It's horrifying."

Lord Rose says he would like to see "targeted action" for those in most need of help.

"I want to make sure we look after those people who can’t take the hit and we know who those people are. We should be dealing with it now. Some money has gone to them, some more is going to them but it will not be enough," he says.

He also references cabinet minister Sajid Javid saying he was waiting on "more facts" over the crisis.

"What 'more facts' is he waiting for?" Lord Rose asks.

Dharshini David
Economics Correspondent

Image source, Getty Images

The cost of living is more than 10% higher than it was a year ago, according to official figures, but you may feel your bills have risen by a lot more.

Here are some ways that your individual experience of price rises may be at odds with what's reported in the news:

It depends on what you're buying

The Official for National Statistics (ONS) measures inflation by taking a typical "basket" of goods and services and seeing how much they're going up in price, and the contents of that basket change each year as habits change.

Not everything you buy is reflected in the official inflation numbers; the more niche, the less likely it is to be monitored. And the things you're buying may go up in price by more than what's in the basket, or if you're lucky by less.

It's also a question of how much

It's not just what's in the ONS's basket that's re-evaluated at the start of every year - but how big a part that item plays in our day to day spending.

Every item has a "weight" attached, so the changing price of petrol will have a much bigger impact than if the cost of tea goes up - simply because we spend a much bigger proportion of our income on petrol.

Read more.

Oliver Smith
Senior business producer, BBC News

The coronavirus pandemic hit the hospitality sector hard.

But Shaf Islam, who runs Chutney Ivy in Leicester, says nothing compares to the prices increases restaurants like his are grappling with right now.

"There’s not one ingredient we use that hasn’t gone up," he says.

"Oil has doubled in price, and that’s such a big thing for an Indian restaurant like ours. But the most frightening thing is the cost of energy," he says.

"My electricity bill is going up from £1,000 a month to £3,000. It’s so unsettling to think about what is coming this winter."

As a result, he's reluctantly put up prices for the first time in five years and has noticed customers are already cutting back on eating out.

"I thought Covid was bad, but this is far, far worse, because at least with Covid we had some support from the government.

"There doesn’t seem to be any help for business with energy costs. I'm scared for the future."

He adds: "If we don’t have the kind of support that we had during Covid, I think the industry is facing something far worse than the pandemic."