Meanwhile, the Consumer Prices Index including owner occupiers' housing costs (CPIH) went up to 8.8%, compared to 8.2% in June.

Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between June and July 2022.

Housing and household services (principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport also contributed significantly to the rise in CPIH.

The ONS has also published the latest House Price Index, which revealed that the average house price in the UK rose by 7.8% over the year to June 2022, albeit down from 12.8% in May.

The average UK house price was £286,000 in June — £20,000 higher than this time last year.

Industry experts react to latest ONS inflation and HPI figures

Paul McGerrigan, CEO at Loan.co.uk:

“There’s a lot going on — at 10.1%, inflation has increased and remains stubbornly high with peak forecasts not yet reached, employees shoulder a real pay decrease and strike action is increasing month-on-month.

“It’s a time of flux; what’s blindingly obvious is that the leadership election needs to be closed out fast, as we need stability and decisiveness at the helm of the UK.

“Until the conflict in Ukraine is definitively on its way to resolution, and stability returns to the flow of materials around the globe, we are in for a further tough ride, and there are difficult decisions to be made by the government and by many millions of households across the UK.”

Giles Coghlan, chief analyst at HYCM:

“Today’s inflation print, which has once again risen above expectations, will provide investors with some serious food for thought.

“Undoubtedly, the newest CPI reading means that we may see further GBP weakness in the medium-term, as it signals clear stagflation for the UK.

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“The central bank must hike rates to control surging inflation, but it does so at the expense of growth.

“In many ways, the latest CPI reading will fall into focus for many investors, who will be conscious that there are no new or responsive fiscal policies in the making from Boris Johnson’s government, as the PM prepares to stand down in September.

“Depending on the outcome of the ongoing leadership contest between Rishi Sunak and Liz Truss, things could change, with Truss being particular keen to shift the Bank of England’s mandate.

“Right now, this is a key risk for the GBP, but as ever, the devil will be in the detail.”

Tomer Aboody, director at MT Finance: 

“As interest rates continue to rise along with inflation, buyers' confidence is dwindling and therefore, values are likely to plateau. 

“While interest rates increase, some buyers will take the view that the cost of borrowing remains at a much lower level than at other times, and the fear of further increases will push buyers to fix rates, allowing them to manage their costs while inflation is soaring.”

Vikki Jefferies, proposition director at PRIMIS:

 “Although today’s figures are indicative of a healthy property market, we’ve seen a slowdown in the rate of house price growth.

“It is clear that a cooling of the market can be expected, particularly after the buying frenzies of the past two years.

“In an environment where house prices went up year-on-year by 7.8%, prospective homeowners now must also contend with stagnating salaries and the rising cost of living.

“Advisers therefore have a serious duty to initiate frank conversations with borrowers in order to help them navigate the complex mortgage market and make informed decisions on their road to homeownership.

“As rising rates further exacerbate affordability issues, there’s never been a better time for the government to get serious about meeting their target of 300,000 new homes a year to relieve some pressure on the housing stock.”