CPI inflation hits new 40-year high as cost of living crisis deepens Business News

UK inflation hit a new 40-year high, climbing 9.1% in the 12 months to May, from 9% in April.

The continued rise is partly due to energy costs, after a £700-a-year rise in energy bills came into effect last month.

Yet economists fear that inflation, or the rate at which prices rise, will climb further in the coming months. The Bank of England estimates that it could reach 11% this year.

Modeling by the Office for National Statistics (ONS) suggests this is the highest rate of inflation since at least February 1982, when inflation hit 10.2%.

Road fuel and food costs were two of the main drivers of the figures, which showed rising prices across the UK economy. Food prices jumped 8.6%, a 13-year high, from 6.7% in April, in part due to the impact of Russia’s invasion of Ukraine on global food markets .

The worsening cost-of-living crisis sparked the most intense industrial action on Britain’s railways in decades this week. Fears are growing that other sectors could go on strike in order to use collective bargaining power to increase wage offers in the public sector.

The government has argued that more generous wage deals could drive up inflation even further, triggering a spiral in wage prices the likes of which have not been seen since the 1970s.

Deputy Prime Minister Dominic Raab told Sky News that the UK must show ‘restraint’ in wage offers for workers because ‘we know that if public sector wages continue to rise it will will only keep inflation high for longer”. Although he admitted people were now struggling to “make ends meet”.

The government will have to stand firm against strikes in the coming months, he said, or we will simply have the “vicious cycle” of high inflation for longer. He added that the fundamentals of the UK economy were strong amid soaring global prices.

“We cannot allow, I am afraid, the unions, in this very militant way in which they have proceeded, to win this argument because it will only hurt the poorest in society,” Mr Raab said.

The unions have responded to these remarks.

TUC General Secretary Frances O’Grady said: “With inflation rising twice as fast as the average wage, we need a government that will stand up for working people. But instead, we have ministers spoiling a fight with workers taking action to defend their standard of living.

“Let’s be clear, inflation is not fueled by nurses and carers who want enough pay to keep food on the table without going to a food bank. And if the government doesn’t do more to protect wages and spending, we are at increasing risk of a recession that will devastate families and businesses.

The Money Advice Trust, the charity that runs National Debtline and Business Debtline, said it was seeing increased demand for help on its telephone lines.

Joanna Elson, its chief executive, said: “With inflation now at 9.1%, rising costs are weighing heavily on household budgets. For many people, the growing burden of high prices is already taking its toll and only adding to the difficulty of meeting day-to-day costs.

“At National Debtline and Business Debtline, we are hearing more and more from people with deficit budgets – where their income is simply not enough to cover their basic needs. Our concern is that options are running out for people who are already in financial difficulty.

Ms Elson added that government support, including the £400 energy rebate, would not be enough for those on the lowest incomes who need ‘urgent action’, including increasing benefits based on the current rate of inflation, rather than a snapshot of last year. .

Labour’s shadow chancellor Rachel Reeves said rapid inflation was pushing family finances ‘to the brink’, but Britons had long faced a ‘low wage spiral’.

“Over the past decade, Conservative mismanagement of our economy has meant that living standards and real wages have not increased. We need more than band-aids to get us back on track – we need a stronger, more secure economy,” Ms Reeves said.

“With Labour’s climate investment pledge and our plans to buy, make and sell more in Britain, we will build the high wage, high growth, low inflation and stable economy that we deserve,” she added.

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This notice was published: 2022-06-22 07:20:33

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