LONDON: Britain’s annual inflation hit a new 40-year high, official data showed on Wednesday June 22, further eroding workers’ wages and putting pressure on the Bank of England to keep raising interest rates ‘interest.
The rate rose slightly to 9.1% in May from 9.0% in April, remaining at the highest level since 1982, the Office for National Statistics (ONS) said in a statement.
Inflation in the UK is expected to hit 11% before the end of the year according to the Bank of England, fueled by soaring energy prices which have raised the prospect of a global recession.
Inflation in the UK rose in May due to “the continued sharp rise in food prices and record petrol prices”, said ONS chief economist Grant Fitzner.
This was offset by higher clothing prices less than a year earlier and lower prices for computer games, he added.
High inflation for decades is causing a crisis in the cost of living.
British railway workers are staging the industry’s biggest strike in more than 30 years this week as soaring prices erode the value of wages.
“The further rise in consumer price index inflation to 9.1% underscores the severe pressure on businesses and households,” said David Bharier, head of research at the UK Chambers of Commerce.
“With this surge in inflation comes a poor economic outlook and unless the government acts urgently to encourage business to invest, the chances of a recession will only increase.”
Countries around the world are being hit by runaway inflation as the war in Ukraine and the easing of COVID-19 restrictions fuel rising energy and food prices.
That has forced central banks to raise interest rates, risking the prospect of a recession as higher borrowing costs hit investments and consumers harder in the pocket.
The Bank of England has raised its key rate five times since December.
“The modest rise in CPI inflation…will not prevent the Bank of England from raising interest rates further, but it may encourage it to opt for a rate hike again. a quarter of a point at its next meeting in August rather than up the stake.” with a hike of half a point, predicted Paul Dales, chief UK economist at Capital Economics.
It comes as Britain faces strikes in other sectors. Lawyers in England and Wales have voted to quit next week in a row over legal aid funding.
Teaching staff, workers in the state-run National Health Service and the postal service are also considering a strike.