Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

UK inflation rises at fastest rate for 40 years as food costs jump

UK inflation rises at fastest rate for 40 years as food costs jump

Prices are continuing to rise at their fastest rate for 40 years with food costs, particularly for bread, cereal and meat, climbing.

UK inflation, the rate at which prices rise, edged up to 9.1% in the 12 months to May, from 9% in April, the Office for National Statistics (ONS) said.

Fuel and energy prices are the biggest drivers of inflation, but the ONS said food costs had pushed it up further.

Workers and unions are pushing for pay rises to cope with higher prices.

But the government has warned against employers handing out big increases in salaries over fears of a 1970s style "inflationary spiral" where firms hike wages and then pass the cost on to customers through higher prices.

Currently, inflation is at the highest level since March 1982, when it also stood at 9.1% and the Bank of England has warned it will reach 11% this year.

Inflation is the pace at which prices are rising. For example, if a bottle of milk costs £1 and that rises by 5p compared with a year earlier, then milk inflation is 5%.


In a BBC-commissioned survey of more than 4,000 people, 82% said they thought their wages should increase to match the rising price of goods and services.

Households were hit by an unprecedented £700-a-year increase in energy costs in April, and fuel price rises in June mean it costs more than £100 to fill an average family car with petrol.

Rail workers walked out on Tuesday causing severe disruption, with further strikes planned for Thursday and Saturday in a dispute over pay, jobs and conditions.

The Rail, Maritime and Transport union is calling for a pay rise of 7%, while employers have offered a maximum of 3%.

Unison, which represents public sector workers, accused ministers of "living on another planet" over "talks of public sector pay restraint".

"Under-pressure health, care, school and council services desperately need staff to be given a pay boost that matches runaway prices," assistant general secretary Jon Richards said.

The biggest teachers' union is also warning of potential industrial action over pay.

The National Education Union has criticised government proposals for a 3% pay increase for most teachers in England, and called for an "inflation-plus increase for all teachers".

But Dominic Raab told the BBC's Today programme: "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."

The ONS said rising prices for food and non-alcoholic beverages helped fuel inflation in May.

Russia's war in Ukraine has severely restricted wheat and maize supplies, which are used to make bread and cereals, from two of the world's biggest exporters.

Ukraine is also a major producer of sunflower oil, meaning the costs of alternatives have also climbed.

Market research firm Kantar has forecast that the average annual grocery bill in the UK is set to rise by £380 this year.

Supermarket Asda told the BBC some shoppers are setting £30 limits at checkouts and petrol pumps, with customers putting less in their baskets and switching to budget ranges.


Grant Fitzner, chief economist at the ONS, said "widespread food price rises" meant the cost of goods leaving factories had risen at their fastest rate in 45 years in May, with the cost of raw materials at the highest on record.

But he said the steep rises in food and record high petrol prices in May had been stemmed by the price of clothes rising less than they did this time last year, along with a drop in computer game costs.

The ONS also revealed average UK house prices increased by 12.4% in the year to April, with average prices now £281,000, £31,000 higher than this time last year.

Richard Lim, chief executive of consultancy Retail Economics, said after families paid for essentials, "the amount of spare cash left over to spending on days out, socialising and other treats is shrinking at an astonishing rate".


'We are not doing as much fun stuff'
Georgia looks for low-cost ways to have a day out, preferably not travelling by car


Mum Georgia, from Birmingham, said she was having to cut back on trips with her daughter Harper-Faye as a result of prices rises.

"I haven't got the money to go to Sea Life Centres and stuff. That's like, £25 a ticket," said she said. "I can't go out as much as I used to, not a chance. I can't afford it."

Responding to the latest inflation rate, Chancellor Rishi Sunak said the government was "using all the tools at our disposal to bring inflation down and combat rising prices".

The government has provided a package of measures, worth £15bn in total, to help people cope with soaring prices.

But Rachel Reeves, Labour's shadow chancellor said the country needed "more than sticking plasters to get us back on course - we need a stronger, and more secure economy".

Liberal Democrat treasury spokesperson Christine Jardine called for a cut in VAT, adding: "This chancellor has hiked taxes time and time again, refusing to slash them to help with the cost of living emergency."


There's no respite from the relentless rise in prices. While at least the rate of rise in inflation appears to have slowed, this is just a pause for breath. Further records in petrol prices and a renewed surge in the price of internationally traded gas after a fire at a key US gas terminal, mean a hot summer, and tricky autumn.

Right now we are also seeing the impact of a notable fall in sterling, compounding the global inflationary pressures, and helping to explain why UK inflation is higher than the rest of the G7.

Inflation this high is disastrous for the personal finances of millions of households, especially as food prices are unarguably surging. "Squeeze" doesn't quite capture how some working families are seeing their entire disposable income wiped out by monthly energy direct debits, or turning up at supermarkets asking the cashiers to stop the till at £30 or £40.

The Bank of England may not see this data as a reason to "act forcefully" which many see as code for a half a per cent rise in August. They will continue to watch the evolution of wage settlements. While there is little evidence of a spiral in wages and prices so far, it is clear we are at a critical moment for the jobs market.

With vacancies at record levels, unions see a one-off opportunity to increase wages, and will continue to push for double digit rises, for example rejecting Rolls Royce's £2,000 cost of living payment. Employers including the government will resist, but workers may find some wind in their sails in negotiations.

One way to try to control how fast prices are rising is to raise interest rates. The aim of this is to increase the cost of borrowing and encourage people to borrow and spend less, and save more.

In a bid to stem the pace of soaring prices, the Bank of England recently increased UK interest rates from 1% to 1.25%.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Senate Scrutinises AI-Driven Personalised Pricing
Spain Seeks Mainland Transfers for 1,100 Children Stranded in Ceuta
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
Record-Low Danube Forces Nuclear Cuts and Emergency Power Curbs
Danube Drought Forces Hungary’s Paks Nuclear Plant Into Full Shutdown
Ceuta Death Toll Rises as Spain and Europe Clash Over Border Response
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
×