Britain’s annual inflation has hit a new 40-year high, official data showed on Wednesday, further eroding wages for workers amid a cost-of-living crisis and putting even more pressure on the Bank of England to hike interest rates further.
The inflation rate rose to 9.1 percent in May from 9.0 percent in April, the highest level since 1982, the Office for National Statistics (ONS) said.
According to the Bank of England, UK inflation will top 11 percent before the end of the year, fueled by rising energy prices that have raised the prospect of a global recession.
Decades of inflation are causing a cost of living crisis in Britain and elsewhere.
British rail workers stage the sector’s biggest strike action in more than 30 years this week as rising prices erode the value of wages.
Inflation rose in May on “continued spikes in food prices and record high gasoline prices,” ONS chief economist Grant Fitzner said.
This was offset by an increase in clothing costs less than a year earlier and a drop in computer game prices, he added.
– “Heavy Pressure” –
“The continued rise in CPI inflation to 9.1% underscores the strong pressures on businesses and households,” said David Bharier, research director at the UK Chamber of Commerce.
“This surge in inflation comes with a poor economic outlook and unless the government acts urgently to encourage business investment, the chances of a recession will only increase.”
Countries around the world are being hit by rising inflation as the Ukraine war and the easing of Covid restrictions push up energy and food prices.
This has forced central banks to raise interest rates and risked the prospect of a recession as higher borrowing costs hurt businesses and consumers more.
The Bank of England has raised interest rates 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 again for a quarter-point hike at its next meeting in August, rather than the up by half a point, predicted Paul Dales, UK chief economist at Capital Economics.
– Strike –
The rise comes as the UK faces strikes in several sectors.
Next week, senior lawyers in England and Wales begin a back-to-back strike over legal aid funding.
Teachers, workers in the state’s National Health Service and postal service are also considering going on strike.
The Union of Rail, Maritime and Transport Workers confirmed on Wednesday that rail workers will stage the second of three strikes on Thursday after talks with Network Rail and train operators broke down.
A third strike is planned for Saturday as a dispute between the RMT and the government escalated.
“We will continue our industrial campaign until we get a negotiated solution that offers job security and a pay rise for our members to deal with the escalating cost of living crisis,” said RMT chief Mick Lynch.
Lynch accused Transport Secretary Grant Shapps of “destroying” the negotiations by not allowing Network Rail to withdraw a letter threatening to fire 2,900 RMT members.
But Shapps called it “a total lie” and accused the RMT of trying “to distract from the fact that the only people responsible for this week’s massive disruption to the public are themselves”.
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