The inflation rate was pushed to a new high in 40 years, the National Bureau of Statistics said on Wednesday, mainly due to rising food prices. A cost of living crisis has intensified in Britain as wage growth has failed to keep up with rising prices. Pandemic-related supply chain disruptions and the war in Ukraine have caused prices for basic necessities such as food and fuel to rise, putting pressure on family budgets. In May, bread, grain and meat prices were 10 percent higher than a year earlier, according to the Office for National Statistics.
Britons still have many months to deal with rapidly rising prices. Inflation is not expected to peak until it reaches 11 percent in October, when a price cap on household electricity and gas bills is reset. This month, the Organization for Economic Co-operation and Development forecast UK inflation to average 8.8 percent this year, compared to about 7 percent in the United States and the eurozone.
In an effort to reduce inflation, the Bank of England has raised interest rates to 1.25 percent, the highest level since 2009. Last week, the central bank said it would “take firm action” against continued inflationary pressures. Policymakers have expressed concern that above-average price increases are spreading to more goods and services, and there is evidence that inflation is no longer being imported into the country through energy and commodity prices alone.
Instead, inflation appears to be increasingly fueled by companies raising prices to cover their own costs and wages, and paying bonuses to attract workers in a tight labor market. Prices of goods sold by British manufacturers, known as producer price inflation, rose 15.7 percent in May from a year earlier, the highest increase since 1977, largely due to a rise in the prices of food products, the Bureau of Statistics said Wednesday.
The shortage of incomes has forced the government to provide assistance to households with direct payments and lower energy bills. But with inflation-adjusted median wages falling the most in more than a decade, the government faces the prospect of a summer of strikes as workers in several sectors, including teachers and National Health Service workers, threaten to leave. to walk the track. Next week, criminal defense attorneys will strike over cuts to legal aid.
