The rate of inflation rose again in May and remains at a 40-year high, though the latest increase was fairly small, new figures show.
The Office for National Statistics said the rate of consumer prices index (CPI) inflation rose from 9% in April to 9.1% in May, matching analysts’ expectations.
Data showed that the rising cost-of-living was driven by rises in food and petrol prices. Fuel costs have risen by almost a third in the last year, the figures showed. The increase matches what analysts had expected and pushes the measure to its highest since early 1982, according to ONS estimates.
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ONS chief economist Grant Fitzner said: “Though still at historically high levels, the annual inflation rate was little changed in May. Continued steep food price rises and record high petrol prices were offset by clothing costs rising by less than this time last year, and a drop in often fluctuating computer games prices.
“The price of goods leaving factories rose at their fastest rate in 45 years, driven by widespread food price rises, while the cost of raw materials leapt at their fastest rate on record.”
Clothing and footwear prices helped keep a lid on inflation, while recreation and culture prices also pulled it downwards. The news will add to the difficulties faced by many people across the UK. Energy bills rose by 54% for the average household at the beginning of April and will remain at this level until October.
But forecasts released this week predict that the Government cap on energy bills could rise again from an already record high £1,971 to £2,980 in the autumn. The Bank of England has predicted that inflation will spike at more than 11% in October after the price cap is changed again.
Responding to the figures, Chancellor of the Exchequer Rishi Sunak said: “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households. We are using all the tools at our disposal to bring inflation down and combat rising prices, we can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth.”
But Shadow Chancellor Rachel Reeves said: “ Inflation is pushing family finances to the brink - but the low wage spiral many face isn’t new. It’s a result of a decade of Tory mismanagement of our economy.
“Labour will build the high wage, high growth, stable inflation economy we deserve.”
David Bharier, head of research at the British Chambers of Commerce, said: “Inflation is set to continue upwards, with a further rise in the energy price cap yet to come, leaving businesses with mounting economic uncertainty, alongside labour shortages. One immediate measure to reduce the pressure on firms would be to cut VAT on business energy bills to 5%.
“This inflationary surge sits alongside a poor economic outlook and unless the Government acts with urgency to encourage businesses to invest, the chances of a recession will only increase."
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