The Office for National Statistics [ONS] has said that UK inflation hit 9.1 per cent in the 12 months to May 2022, up from the nine per cent registered in the year to April.
Inflation, currently at its highest rate since March 1982, is being stimulated by rising food, energy and fuel costs, with the ONS saying that price rises for foods such as bread, cereal and meat were becoming a major factor.
The war in Ukraine has squeezed supplies of crops such as wheat and maize, which are key ingredients in bread and cereals, with Ukraine and Russia being two of the biggest exporters of such products.
Ukraine’s major sunflower oil production being restricted by the war has meant that consumers have had to start buying alternative products, resulting in price climbs.
The raising of the energy price cap in April 2022 also saw households faced with an additional £700 per year on average on their energy bills, while spiralling fuel price rises in June meant that it costs in excess of £100 to fill the tank of an average family car.
The Bank of England expects inflation to rise to 11 per cent in 2022 and has raised UK interest rates to 1.25 per cent in a bid to cool price hikes.
With wages not keeping pace with inflation, unions and workers have begun calling for salary increases, but the government has ruled out public sector pay raises in line with inflation out of fear of exacerbating the problem and being drawn into a “spiral” of inflation.
Deputy prime minister, Dominic Raab, told the BBC: “We have got to stop making the problem worse by fuelling pay demands that will only see inflation stay higher for longer and that only hurts the poorest the worst.”
Trade unions have made headlines this week as 40,000 members of the Rail, Maritime and Transport [RMT] union shut down Great Britain’s railway network in a series of major strikes, voicing their dissatisfaction over salaries, potential redundancies and working conditions. RMT has called for a salary increase of seven per cent, while employers have offered a pay rise of three per cent.
Meanwhile, chancellor Rishi Sunak has said that the government is “using all the tools at our disposal to bring inflation down and combat rising prices”.
He said: “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households.”
However, Labour shadow chancellor, Rachel Reeves, said that the government’s actions to address the cost-of-living crisis have amounted to nothing more than “sticking plasters”.
Reeves said: “We need a stronger, and more secure economy. Though rapid inflation is pushing family finances to the brink, the low wage spiral faced by many in Britain isn't new. Over the last decade, Tory mismanagement of our economy has meant living standards and real wages have failed to grow.”
Laura Suter, head of personal finance at AJ Bell, has suggested that with prices currently “rising across the board”, the current scenario has put paid to any hopes of inflation “ebbing away later this year”.
She said that the prospect of inflation subsiding before the end of 2022 was "dead" adding: “Unfortunately, more gloom lies ahead.”
Photo by Krzysztof Hepner on Unsplash
