nflation in the United Kingdom rose 9.1% year-on-year in May, its highest level in 40 years.
The blistering 9.1% rise in the Consumer Price Index was in line with economists’ expectations
and slightly higher than the 9% increase reported for April of this year.
Consumer prices rose by 0.7% in May from April, slightly above expectations for a 0.6% rise but
below the 2.5% monthly increase seen in April, indicating that inflation is beginning to slow
following multiple interest rate increases by the Bank of England.
Britain’s Office for National Statistics said the last time inflation was this high was in January
1982 when it rose nearly 11% on an annualized basis.
The biggest contribution to the May inflation rate came from housing costs, primarily electricity,
gas and other fuels, along with motor vehicle prices.
The Bank of England last week raised interest rates for a fifth consecutive time, though it
stopped short of the aggressive hikes executed in the U.S. and Switzerland, as it looks to tame
inflation without worsening the current economic slowdown.
The main bank rate in England currently sits at a 13-year high of 1.25% and the country’s
central bank expects inflation to exceed 11% by this October.
A recent poll found that a quarter (25%) of people in the United Kingdom are skipping meals as
inflationary pressures and a food crisis conspire to create what Bank of England Governor
Andrew Bailey has called an “apocalyptic” situation for consumers.
Along with the external shocks facing the global economy — such as food and energy price
surges and the war in Ukraine — the United Kingdom is also navigating domestic pressures,
such as the unwinding of the government’s pandemic fiscal support and the impacts of Brexit.
