Joel Hills explains how the soaring cost of food has helped push UK inflation to its highest rate in four decades
UK inflation has risen further to 9.1%, the highest rate in 40 years as the cost of living crisis deepens.
It's up from 9% in April to 9.1% in May, the Office for National Statistics (ONS) has said, with the increase being driven largely by the increase in food prices, which added more than 0.2 percentage points to the inflation number.
Chancellor Rishi Sunak sought to reassure people that he will be able to reduce inflation but did not reject a prediction from many economists that the UK is heading for recession.
Inflation is the rate of increase in prices for goods and services. If a loaf of bread costing £1 rises in price by 5p, the bread inflation is 5%.
The chancellor told broadcasters: “I want people to be reassured that we have all the tools we need and the determination to reduce inflation and to bring it back down.
“Firstly, the Bank of England will act forcefully to combat inflation.
“Secondly, the government will be responsible with borrowing and debt so we don’t make the situation worse and drive up people’s mortgage rates any more than they are going to go up.
“Lastly, we are improving the productivity of our economy, improving the supply of energy we have and moving people off welfare and into work.”
A steep rise in the price of food, partly driven by the war in Ukraine, is cause for concern, as ITV News Business and Economics Editor Joel Hills notes.
While Downing Street says it would be "reckless" for public sector pay to match inflation, it's likely pensions will do, thanks to the return of the so-called triple lock
"Inflation is painfully high and there’s more in the pipeline," he tweeted, writing that UK manufacturers are hiking their prices by the highest rates for 45 years.
Last week, the Bank of England warned inflation was on track to reach 11% later this year, with gas and electricity prices continuing to soar.
“Though still at historically high levels, the annual inflation rate was little changed in May,” ONS chief economist Grant Fitzner said. “Continued steep food price rises and record high petrol prices were offset by clothing costs rising by less than this time last year, and a drop in often fluctuating computer games prices. “The price of goods leaving factories rose at their fastest rate in 45 years, driven by widespread food price rises, while the cost of raw materials leapt at their fastest rate on record.”
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Why has inflation risen so much and what effect it is having on consumer costs?
Energy bills are a huge contributor to inflation, with oil and gas prices remaining high in part due to the Ukraine war.
Russia is one of the biggest exporters of crude oil, and the world's largest natural gas exporter, which is essential to heating homes, fuelling planes and filling cars with fuel.
But prices have rocketed since the country's invasion of Ukraine in February, which has severely restricted wheat and maize supplies from two of the world's biggest exporters.
Household staples such as minced beef, bread and rice are among foods that have recorded large increases.
Ukraine is also a huge producer of sunflower oil, meaning the costs of alternatives have surged too.
Fuel prices are also surging, with average petrol prices reaching 161.8p per litre in April, compared to 125.5p at the same time in 2021.
The price rises have been attributed to a surge in the cost of oil, fuel shortages and increased demand following the global relaxation of Covid restrictions.
The latest inflation number will add to the growing financial pressures faced by many people across the UK.
Energy bills rose by 54% for the average household at the beginning of April and will remain at this level until October. Forecasts released this week predict that the government cap on energy bills could rise again from an already record high £1,971 to £2,980 in the autumn.
The Liberal Democrats have claimed that families will be hit with a £1,300 “bombshell” from a combination of tax hikes and inflation. The party is calling on the government to introduce an emergency budget to tackle the soaring cost of living. Shadow Chancellor Rachel Reeves responded to the ONS figures by saying that Conservative "mismanagement of our economy" has led to a fall in living standards and produced stagnant wages.
“Today’s rising inflation is another milestone for people watching wages, growth and living standards continue to plummet," she said. “Though rapid inflation is pushing family finances to the brink, the low wage spiral faced by many in Britain isn’t new."
In an attempt to stem the pace of surging prices, the BoE recently increased UK interest rates from 1% to 1.25%.
But trade unions have said not enough is being done to help workers.
Trades Union Congress General Secretary Frances O’Grady said the government should defend wages and give decent pay rises to those employed in the public sector.
“With inflation rising twice as fast as average pay, we need a government that will stand up for working people,” Ms O’Grady, the country's top trade union leader, said.
“But instead, we have ministers spoiling for a fight with workers who take action to defend their living standards.” Meanwhile, the general secretary of union Unite, Sharon Graham, demanded that employers who can should give their workers pay rises. “Wage restraint – absolutely not. It’s time for profit restraint.” She added: “It’s not hard-pressed workers who are driving inflation, it’s whole swathes of corporate Britain who have lined their pockets. “Runaway profits are driving the inflation that is threatening a national pay cut and yet the vast majority of politicians remain silent.”