“Rising inflation is putting further pressure on policymakers to ease the burden on households, while complicating the Bank of England’s task,” said Yael Selfin, chief economist at KPMG UK.
The Bank of England stated last week that inflation is likely to remain above 9% in the coming months, before peaking at just over 11% in October, when regulated household energy bills will rise again. .
The prices of food and non-alcoholic products rose 8.7% in annual terms in May, the biggest jump since March 2009, which makes this category the biggest driver of year-on-year inflation last month. Headline consumer prices rose 0.7% on a monthly basis in May, according to the ONS, slightly above the consensus of 0.6%.
The UK’s headline inflation rate in May was higher than the US, France, Germany and Italy. Although Japan and Canada have yet to release their consumer price data for May, neither is likely to come close to the UK figure.
The Bank of England fears that price rises will exceed 11% by the end of the year, a major blow to the purchasing power of poor households. “The significant rise in food prices and record gasoline prices” were somewhat held back in May anyway by “a smaller increase in clothing prices and a reduction (in prices) of computer games “Summarized Grant Fitzner, chief economist at the ONS, on Twitter.
Last week, the Bank of England (BoE) announced a fifth interest rate hike, to 1.25%, a new record since 2009, to fight inflation.
Source: Ambito
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