UK inflation rose to a 40-year record 9.1%
LONDON – Rising food prices pushed British consumer inflation to a 40-year high of 9.1% last month, marking the highest rates among Group of Seven (G7) countries and the severity of the cost of living crisis.
The reading, which rose to 9.0% in April, matched the consensus of economists in a Reuters poll. Historical records from the Office for National Statistics show that May inflation was the highest since March 1982 – and is likely to get worse.
Sterling, one of the worst performing currencies against the US dollar this year, fell 0.6% to দিনে 1.22 a day.
Some investors see Britain as at risk of both persistently high inflation and a recession, reflecting its large imported energy bills and persistent Brexit problems that could further damage trade relations with the European Union.
“Because the economic outlook is so vague, no one knows how high inflation could go, and how long it will last – making it particularly difficult to judge revenue and monetary policy,” said Jack Leslie, senior economist at the Resolution Foundation think tank.
Earlier on Wednesday, the Resolution Foundation said Brexit had increased the cost of living for families, pushing Britain into a more closed economy, with detrimental long-term effects on productivity and wages.
Britain’s headline inflation in May was higher than in the United States, France, Germany and Italy. Although Japan and Canada have not yet reported consumer price data for May, neither is likely to come close.
The Bank of England said last week that inflation would remain above 9% in the coming months before rising slightly above 11% in October, while regulated household energy bills would rise again.
The British government is trying its best to fight the rise in prices, Finance Minister Rishi Sunak said after the release.
Food and non-alcoholic beverage prices rose 8.7% year-on-year in May – the biggest jump since March 2009 and this segment made the biggest driver of annual inflation last month.
Overall consumer prices rose 0.7% month-on-month in May, the ONS said, slightly above the 0.6% consensus.
British factory-gate prices – a key determinant of prices paid by consumers in later stores – were 22.1% higher in May than a year earlier, the biggest increase since these records began in 1985, the ONS said. – Reuters
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