Inflation fuels jump in UK government debt costs

London: Interest payments on British government debt jumped by almost 40 per cent last month as rocketing inflation continues to add to state borrowing, according to official data.

The Office for National Statistics (ONS) said Government borrowing hit 4.9 billion pounds in July, reports dpa news agency.

It is significantly ahead of the predictions of analysts, who had forecast 2.8 billion pounds in borrowing last month.

Nevertheless, borrowing was 0.8 billion pounds below levels from the same month last year, but represented a 5.9 billion pounds surge from pre-pandemic levels in 2019, when the government reported a surplus of 0.9 billion pounds.

It came as debt interest payments climbed to 5.8 billion pounds in July, lifting from 3.5 billion pounds in the same month last year due to increases in Retail Price Index (RPI) inflation.

Earlier this week, the ONS revealed that RPI leapt to 12.3 per cent, while the broader Consumer Price Index (CPI) inflation figure hit a new 40-year-high of 10.1 per cent.

In response, Chancellor Nadhim Zahawi said: "I know that rising inflation is creating challenges for families and businesses, and it is also putting pressure on the public finances by pushing up the amount we spend on debt interest.

"To help people during this difficult time, Government support is continuing to arrive in the weeks and months ahead, targeted to those who need it most, like pensioners, people on low incomes, and those with disabilities.

"We are taking a balanced approach: safeguarding the public finances while providing significant help for households."

Government spending increased by 3.4 billion pounds to 76.5 billion pounds in July compared with the same month year, the ONS added.