Inflation set to be more than double wage rises

The ratio of inflation to wage rises means real-terms spending power is eroded. Credit: PA

If today's inflation figures exceed 3%, they will continue to erode consumers' spending power and savings and significantly outstrip wage rises, which increased by just 1.3% in the three months to April compared with a year earlier.

Inflation last hit 3% in April 2012 and has remained stuck above the Bank's 2% target since December 2009.

Figures from the British Retail Consortium recently showed food price inflation rose to 2.7% in June from 2.4% in May, as seasonal price pressures bled through to higher shelf prices.

However, prices of non-food items fell 1.9% in June from 1.5% a month earlier.

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Inflation hits 14-month high

Inflation surged to a 14-month high in June as rising prices at the fuel pumps and discounting by fashion retailers intensified pressure on households. Consumer Prices Index (CPI) inflation rose to 2.9% last month, from 2.7% in May, the (ONS) said.