Rising food and fuel prices pushed inflation to a 40-year high on Wednesday, sparking fresh calls for ministers to do more to help ease the cost of living crisis.

Official figures from the Office for National Statistics show inflation at 9.1% in the 12 months to May – up from 9% in April and the highest level since 1982. But with the Bank The UK Central Bank warned that inflation could hit 11 per cent by the end of the year, with the Government under increasing pressure to provide more support to millions of struggling households.

Asda President, Stuart Rose, called on ministers to rethink and come up with the idea of ​​a VAT cut to reduce prices spiraling out of post-Covid supply decline and Russia’s invasion of Ukraine. Lord Rose told the BBC: “I know the Government is very reluctant to put its hands in its pockets again, because it has caused a huge debt in the wake of Covid,” Lord Rose told the BBC.

“But this is a crisis of similar proportions, and people can be affected for a lot longer than Covid has had on us.

“So it’s time to rethink. I would urge them to do more and I would urge them to do more for those at the bottom of the income ladder. ”

The ONS said the latest increase in inflation was mainly driven by a 8.7% increase in food prices in the year to May. The largest contributions are from bread, cereals and meat.

But it also added that the jump in fuel costs was also behind the rise in inflation with gasoline prices averaging 165.9 points per liter in May 2022, compared with 127.2 points per liter. a year earlier.

With diesel and gasoline prices hitting record highs in May, the ONS said the 12-month price for motor fuel was 32.8%, the highest since January 1989.

The war in Ukraine is likely to add to price pressure in the coming months, and in another blow today the RAC said gasoline and diesel prices both hit new highs yesterday.

ONS chief economist Grant Fitzner noted “food prices continue to rise and gasoline prices hit record highs” but also highlighted “commodity prices leaving factories” which he said “increased at their fastest pace in 45 years.” five”.

Rising raw material costs and factory prices have led to renewed concerns that inflation could stay higher for longer, leading to more calls for wages from public and private sector workers. private.

Former Finance Secretary Lord O’Neill said the UK economy was in a “very fragile position”, adding on BBC Radio 4’s Today programme, that more persistent inflation could lead to ” a vicious cycle of the 1970s” forced the Bank of England to be even tougher. action to tame rising prices.

Last week, they raised interest rates by 0.25 percentage points to 1.25 percent.

Prime Minister Rishi Sunak is resisting calls by some Cabinet colleagues and Tory MPs for income tax cuts to defuse the crisis.

The inflation rate rebounded in May, continuing to be at a 40-year high, the Office for National Statistics said.

The inflation rate of the consumer price index (CPI) rose from 9% in April to 9.1% in May, statisticians said.

The gain was in line with what analysts had expected.

“While still at historic highs, the annualized inflation rate was little changed in May,” said ONS chief economist Grant Fitzner.

“Continually rising food prices and record-high gas prices are offset by the cost of clothing rising less than this time last year, and the price of computer games regularly fluctuating.

“Commodity prices leaving factories rose at their fastest pace in 45 years, as food prices rose across the board, while raw material costs rose at the fastest pace on record.”

Photo of the Press Association

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

Clothing and footwear prices have helped curb inflation, while prices for culture and entertainment have also dragged it down.

The news will add to the difficulties many people across the UK are facing. Energy bills rose 54% for the average household in early April and will stay at this level through October.

But projections released this week predict that the Government’s limit on energy bills could rise again from a record high of £1,971 to £2,980 in autumn.

The Bank of England has predicted that inflation will soar by more than 11% in October after the price cap is changed again.

Shadow Chancellor Rachel Reeves said: “Today’s rising inflation is another major milestone for those who watch wages, growth and living standards continue to plummet.

“While rapid inflation is pushing household finances to the brink, the spiral of low wages facing many people in the UK is not new.

“Over the past decade, Tory’s mismanagement of our economy has prevented real living standards and wages from rising.”

Prime Minister Rishi Sunak said: “I know that people are worried about the rising cost of living which is why we have taken targeted action to help families, receiving 1,200 pounds for the eight million most vulnerable households.

“We are using all the tools at our disposal to reduce inflation and combat rising prices – we can build a stronger economy through independent monetary policy, fiscal policy responsibly, without adding to inflationary pressures and by boosting our long-term productivity and growth. ”

Energy prices don’t just eat into household energy bills.

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

As the price of fuel increases, so does the price of the final product.

Energy prices have skyrocketed in the last year. For starters, they started to rise as the global economy began to reopen and demand for energy increased in the wake of the pandemic.

Then prices took a turn for the worse, especially in Europe, when Russia launched a full-scale invasion of Ukraine in February.

Russia is one of the largest energy producers in the world.


Please enter your comment!
Please enter your name here