The UK inflation rate hit another 40-year high in May, hitting 9.1%, the highest level since 1982.
Driven by rising food prices last month, the 9 percent rate hike in April was in line with economists ’expectations that inflation will hit double digits in the fall.
The Bank of England expects the inflation rate to exceed 11 per cent in October, significantly higher than in other similar G7 countries.
Rising inflation will increase the cost of living pressure on households, intensify demands for wage increases to offset rising prices and make it difficult to resolve labor disputes such as this week’s rail strike.
Prices rose at a high rate across a wide range of categories. For a quarter of all individual items measured by the National Bureau of Statistics, prices were 10 percent higher than last May, and for half of the categories measured, they were up 7 percent. one hundred or more.
The biggest contributor to rising inflation was food prices, which rose 1.5 percent in May, and bread, cereals and meat rose faster.
The National Statistics Office said road fuel prices were 32.8% higher in May than a year earlier, the biggest annual jump in category prices since they were first compiled. the indexes detailed in 1989.
Next month, the rate of inflation is likely to rise sharply again, the Resolution Foundation said, because it would take into account the recent rise in fuel prices at the pumps. In May, the average price of a liter of petrol was £ 1.66 and has risen by about 20 pence a liter since then.
Yael Selfin, chief UK economist at KPMG, said “there was still no indication of a decline in inflation” and that, although the biggest increases were in energy and road fuels. , “the rise in prices spread widely throughout the economy.”
Paul Dales, chief economist at UK Capital Economics, said the inflation pattern justified further interest rate hikes, but not a half-point increase at the next Bank of England meeting in August . It is not obvious in this statement that there are indications of “more persistent inflationary pressures”, which the Bank said last week would lead it to “act strongly”.
However, a worrying sign from Grant Fitzner, chief economist at the ONS, was that price pressures were still bubbling in factories across the UK.
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“The price of goods leaving the factories rose at the fastest rate in 45 years, driven by the widespread rise in food prices, while the cost of raw materials rose at the fastest rate ever. registered, “he said.
In a statement, Chancellor Rishi Sunak said: “We are using all the tools at our disposal to reduce inflation and combat rising prices; we can build a stronger economy through an independent monetary policy, a responsible fiscal policy that do not add inflationary pressures and increase our long – term productivity and growth. ”
In the latest figures, the retail price index, used to calculate the increase in index-linked bonds, rose to 11.7% in May from 11.1% in April, marking the highest reading. discharge of the measure since October 1981.