Inflation hits fresh 40-year high

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REUTERS/Paul Childs/File Photo

British annual inflation has hit a fresh 40-year high, official data showed Wednesday, further eroding workers’ wages and pressuring the Bank of England to keep on raising interest rates.

The headline inflation rate edged higher to 9.1 percent in May from 9.0 percent in April, remaining at the highest level since 1982, the Office for National Statistics (ONS) said in a statement.

The  figures show food inflation at 8.6 per cent, almost in line with the grocery inflation figures of 8.3 per cent reported by market researcher Kantar yesterday.

UK inflation is set to top 11 percent before the end of the year according to the Bank of England, fuelled by soaring energy prices.

Inflation increased in May on “continued steep food price rises and record high petrol prices”, said ONS chief economist Grant Fitzner.

This was offset by clothing costs rising by less than a year earlier and a drop in prices of computer games, he added.

Responding to the inflation figures, Helen Dickinson, chief executive of the British Retail Consortium, said businesses are also feeling the squeeze from rising prices, as “higher energy prices, a tight labour market and increasing transport and commodity costs filter through to consumers.”

But she added that retailers will continue try to absorb as much of the costs as possible.

“Retailers are working hard to do what they can to protect their customers from price rises, including by expanding value ranges, keeping the cost of essentials down and providing discounts for certain vulnerable groups. With inflation only set to rise, the BRC will continue to work with retailers to find ways to mitigate future price rises,” she said.

Decades-high inflation is causing a cost-of-living crisis.

Britain’s railway workers are this week staging the sector’s biggest strike action in more than 30 years, as soaring prices erode the value of wages.

Countries around the world are being hit by soaring inflation as the Ukraine war and the easing of Covid restrictions fuel energy and food price hikes.

That has forced central banks to hike interest rates, risking the prospect of recession as higher borrowing costs hit investment and consumers further in the pocket.

The Bank of England has raised its key interest rate five times since December.

The UK meanwhile faces more strikes, with lawyers in England and Wales having voted to walk out from next week in a row over legal aid funding.

Teaching staff, workers in the NHS and the postal service are also mulling strike action.