Pressure on Households Mounts as Inflation Rises to New 40-Year High

Inflation rose again in May, remaining at a 40-year high and exacerbating pressure on households across the UK, the Office for National Statistics (ONS) said.

Consumer price index (CPI) inflation rose from 9% in April to 9.1% in May, statisticians said.

The ONS estimates that this increase is in line with analysts’ expectations and is at its highest level since early 1982.

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“While the annual inflation rate is still at historically high levels, it has changed little in May,” said ONS chief economist Grant Fitzner.

“The continued surge in food prices and record high gas prices have been offset by clothing prices rising less than this time last year and falling computer game prices, which fluctuate frequently.

“Prices of goods leaving factories rose at the fastest rate in 45 years due to widespread food price increases, while the cost of raw materials rose at the fastest rate on record.”

The change was largely driven by rising food prices, which added more than 0.2 percentage points to inflation, the ONS said.

The prices of clothing and footwear helped keep inflation in check, while the prices of entertainment and culture also pulled it down.

The news will exacerbate the hardships many people in the UK are facing. Electricity bills rose by 54% for the average household in early April and will remain at that level until October.

But forecasts released this week predict that the government cap on electricity bills could rise again from an already record high of £1,971 to £2,980 in the fall.

The Bank of England forecasts that inflation will rise by more than 11% in October after the price ceiling changes again.

Today’s rising inflation is another milestone for people watching as wages, economic growth and living standards continue to plummet.Shadow Chancellor Rachel Reeves

Shadow Chancellor Rachel Reeves said: “Today’s rising inflation is another milestone for people watching wages, economic growth and living standards continue to plummet.

“While rapid inflation is pushing family finances to the brink, the low wage spiral that many in Britain are facing is not new.

“Over the past decade, Tory mismanagement of the economy has meant that living standards and real wages have not risen.”

Chancellor Rishi Sunak said: “I know people are concerned about the rising cost of living, which is why we have taken targeted action to help families by giving £1,200 to the eight million most vulnerable households.

We use all the tools at our disposal to reduce inflation and combat rising pricesChancellor Rishi Sunak

“We are using every tool at our disposal to bring down inflation and fight price increases – we can build a stronger economy through independent monetary policy, responsible fiscal policy that does not increase inflationary pressures, and by raising our long-term performance. and growth.”

The price of energy does not only depend on household electricity bills.

Gas, oil and other fossil fuels are needed to produce and transport many of the goods that households buy each month.

When the price of fuel rises, the price of the final product also rises.

Energy prices have risen over the past year. For starters, they started to rise as the global economy began to reopen and demand for energy surged after the pandemic.

Prices later worsened, especially in Europe, when Russia launched a full-scale invasion of Ukraine in February.

Russia is one of the world’s largest energy producers.