The biggest jump in the cost of living for decades has today been confirmed as inflation reached a new 40-year high.

The rate of Consumer Prices Index inflation rose to 10.1% in July, the highest in more than 40 years and a jump from 9.4% in June, the Office for National Statistics has said.

Estimations from Pantheon Macroeconomics expected to see a rise to 9.8%, however, numbers made it into the double figures.

Inflation reaches highest in 4 decades

This is the highest figure since February 1982, when CPI reached 10.4%, according to ONS estimates.

Inflation is expected to peak later this year at 13.3% and will push the UK into a recession, according to the Bank of England (BoE).

The rise will come as the energy price cap – which regulates what more than 20 million households pay for their gas and electricity – rises in October.

The cap is set to hit around £3,635 according to the latest predictions. It is an 84% rise from today’s already record-high price cap.

After CPI inflation was shown to reach 10.1% in July, ONS chief economist Grant Fitzner said: “A wide range of price rises drove inflation up again this month.

“Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices.

“Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July.

“Driven by higher demand, the price for package holidays rose, after falling at the same time last year, while air fares also increased.

“The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively.”

Workers' pay slump as cost of living increases

This comes as UK workers saw their pay lag behind inflation at record levels over the past quarter, according to official figures.

The Office for National Statistics (ONS) said regular pay, excluding bonuses, grew by 4.7% over the three months to June.

Analysts had predicted that wages would increase by 4.5%.

The ONS said this resulted in a 4.1% drop in regular pay for employees once CPI inflation is taken into account, representing the biggest slump since records began in 2001.