Prices started rising faster in July as the UK economy opened up after the lockdown and measures to contain the virus added to trade costs.
The annual inflation rate rose to 1% in July, from 0.6% in June, according to official figures.
The consumer price index (CPI) jump was bigger than expected as companies like hairdressers and dentists adjusted their practices.
Another key factor was the lack of traditional summer sales.
The Bureau of National Statistics said clothing and footwear prices were the main contributor to the rise.
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Most years, retailers cut clothing prices between June and July to clear their summer ranges in anticipation of fall.
Many stores were only able to open in July, when the lockdown on non-essential retailers was relaxed, and some retailers had already offered discounts to attract consumers who shop online from home.
When businesses were able to welcome buyers again in July, many faced higher costs associated with social distancing and improved cleaning. Service providers saw fewer clients.
As a result, prices for hairstyling and personal care jumped from the previous month, according to the ONS, with men’s haircuts costing 6.1% more and women 4.5% more.
Private health services cost 1% more in July than in June, the ONS said, as physiotherapists and dentists made their workplaces safe by Covid.
Transport costs also rebounded after falling sharply during the lockdown.
“Inflation has risen, in part, due to the largest monthly increase in prices at the pump in nearly a decade, as international oil prices have risen from their lows earlier this year,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
The cost of food and non-alcoholic beverages edged down between June and July, helping to offset some of the price increases elsewhere.
‘It was a necessity’
Kaboodles in Torquay, Devon, is fortunate to have enough space to spread their hairdressers across three floors, allowing them all to get back to work.
But there have been additional costs, says company manager Alex Walker, including acrylic screens between the sinks and at the front desk, and PPE for staff. Plastic visors cost between £ 5 and £ 15 each and masks cost 30p each.
Kaboodles has an eco-friendly philosophy, so they reuse items whenever possible, but there is some wear and tear and they need to make sure they meet strict Covid-19 guidelines.
More importantly, appointment times have been extended by 15 minutes to allow additional disinfection of equipment and the work area, reducing the number of haircuts they can fit into.
“You lose two to three clients a day, so that’s pretty big,” says Walker.
As a result, Kaboodle’s prices have increased: for example, a standard wash, cut and blow-dry go from £ 35 to £ 40.
“For us it was a necessity,” he says. “We wanted to look at the immediate future but also the long term of the company. We have a large team of 18 people. We didn’t have to fire anyone or keep anyone on leave. Everyone is back to work. my number one goal. ”
The July figures are used to calculate rail fare increases, using a different measure of inflation, the Retail Price Index (RPI). As a result, season ticket holders and commuters will see their fares increase by 1.6% starting in January.
Inflation is calculated by looking at a “basket” of commonly purchased goods and comparing their current cost to last month and the same time last year.
Due to the pandemic, the ONS said it was unable to identify the prices of many of the 720 items it usually monitors.
In July, the ONS said prices for just 12 items were still not available, reflecting parts of the economy still unable to function normally, including cruises, live music, theater, admission to the pool and soft play sessions.
Ed Monk, of Fidelity International, said the inflation figures showed economic life was “getting back to normal.” However, he said he did not expect inflation to continue to rise sharply, pointing to the Bank of England’s forecast that prices could drop in August.
“Looking ahead, there is the possibility of negative inflation, or record lows, as VAT cuts and Rishi’s ‘eat out to help’ program skew real levels of consumer spending.
“On the other hand, the increase in the government’s budget deficit could lay the groundwork for higher inflation in the months to come. A potentially worrying sign with consumer confidence still struggling and negative wage growth. “