Home Business UK inflation unchanged in May as cost of living remains high

UK inflation unchanged in May as cost of living remains high

PHOTO | BBC

The UK’s inflation rate is remaining stubbornly high, with prices for food, dining out and other recreational activities continuing to rise.

Inflation, which measures the pace prices rise at, was 8.7% in the year to May, the same rate it was in April.

Channel 1

Price rises for flights and second-hand cars last month all contributed to prices remaining higher than expected.

The Bank of England is expected to raise interest rates on Thursday in a bid to slow prices from rising as fast.

Part of the Bank’s job is to keep inflation at a target rate of 2% – far lower than the current rate of 8.7%.

It has been steadily raising interest rates since the end of 2021, which make the cost of borrowing money more expensive, in response to consumer prices soaring.

This has led to concerns over loans, particularly mortgages, with homeowners facing large increases in repayments when fixed-term deals come to an end.

Chancellor Jeremy Hunt said the government would “not hesitate” in its resolve to support the Bank, which is an independent institution, as it “seeks to squeeze inflation out of our economy”.

Many households have also already been feeling the pinch of higher prices, in particular for food and energy for months.

Food price inflation, which is the rate at which prices for groceries have risen compared to the year before, was 18.3% in May, down slightly from 19% in April.

But Yael Selfin, chief economist at KPMG UK, said despite a “modest easing” of food price inflation, prices for all consumer goods continuing to rise at a fast pace piled the pressure on for more interest rate hikes.

“More worryingly for the Bank of England, strong core inflation suggests that firms may now be passing on the rising costs from higher wage bills to consumers,” she said.

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