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UK Prices Are Continuing to Rise at Their Fastest Rate for 40 years

UK inflation hits 9.1% as prices rise at fastest rate for 40 years

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Prices are continuing to rise at their fastest rate for 40 years as food, energy and fuel costs continue to climb.

UK inflation, the rate at which prices rise, edged up to 9.1% in the 12 months to May, from 9% in April, the Office for National Statistics (ONS) said.

The figure is now at the highest level since March 1982, when it also stood at 9.1%.

The Bank of England has warned inflation will reach 11% this year.

Inflation is the pace at which prices are rising. For example, if a bottle of milk costs £1 and that rises by 5p compared with a year earlier, then milk inflation is 5%.

The ONS said rising prices for food and non-alcoholic beverages helped fuel inflation in May, with the biggest cost increases seen in bread, cereals and meat.

Russia’s war in Ukraine has severely restricted wheat and maize supplies from two of the world’s biggest exporters.

Ukraine is also a major producer of of sunflower oil, leading to the costs of alternatives also climbing.

Market reach firm Kantar has forecast that the average annual grocery bill in the UK is set to rise by £380 this year.

Supermarket Asda told the BBC some shoppers are setting £30 limits at checkouts and petrol pumps.

Customers are putting less in their baskets, switching to budget ranges and are worried about the future, its chairman Lord Stuart Rose said.

Grant Fitzner, chief economist at the ONS, said the prices of goods leaving factories rose at their fastest rate in 45 years in May, driven by “widespread food price rises”.

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Mr Fitzner added the cost of raw materials “leapt at their fastest rate on record”.

But he said the steep rises in food and record high petrol prices had been “offset” by the price of clothes rising less than they did this time last year, along with a drop in computer game costs.

UK inflation chart

Responding to the latest inflation rate, Chancellor Rishi Sunak said the government was “using all the tools at our disposal to bring inflation down and combat rising prices”.

“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,” he added.

But Rachel Reeves, Labour’s shadow chancellor said the country needed “more than sticking plasters to get us back on course – we need a stronger, and more secure economy”.

“Today’s rising inflation is another milestone for people watching wages, growth and living standards continue to plummet.

“Though rapid inflation is pushing family finances to the brink, the low wage spiral faced by many in Britain isn’t new. Over the last decade, Tory mismanagement of our economy has meant living standards and real wages have failed to grow.”

One way to try to control how fast prices are rising is to raise interest rates. This increases the cost of borrowing and encourages people to borrow and spend less, and save more.

In a bid to stem the pace of soaring prices, the Bank of England recently increased UK interest rates from 1% to 1.25%.

The move was the fifth consecutive rise, pushing rates to the highest level in 13 years. However, when inflation was last at 9.1% in March 1982, interest rates were 13%, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said.

‘More gloom lies ahead’

Laura Suter, head of personal finance at AJ Bell, said hopes of inflation “ebbing away later this year are dead” and warned the winter “could be tougher than the last”.

“Unfortunately, more gloom lies ahead,” she added.

“Once again fuel is the factor driving inflation higher, from home energy bills to petrol and diesel prices pushing up transport costs.

“But it’s not just energy bills increasing, prices are rising across the board. Soaring food costs are also playing their part.”

Source: BBC

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