Britainโs annual inflation rate unexpectedly remained at 8.7 per cent in May, official data showed on Wednesday, piling pressure on the Bank of England and government to act over a cost-of-living crisis.
Markets had forecast a drop from Aprilโs level, while the BoE was already widely expected to raise interest rates again Thursday to combat an inflation rate which is the highest among G7 nations.
The latest data is a blow also for Prime Minister Rishi Sunak, who has made cutting inflation a priority for his Conservative government heading into a general election next year.
Britain has endured months of strikes by workers demanding higher wages to help with the cost-of-living crisis.
โWe know how much high inflation hurts families and businesses across the country,โ finance minister Jeremy Hunt said following the latest consumer prices index data.
UK inflation had been expected to cool to 8.4 per cent last month while core inflation, which strips out food and energy costs, unexpectedly jumped to 7.1 per cent in May, said the Office for National Statistics.
โCore inflation rose again, to its highest rate in over 30 years,โ noted Sarah Coles, head of personal finance at Hargreaves Lansdown.
โLower energy costs will eventually feed into prices across the board, and we should see the pain at the supermarket subside a little in the coming months.
โHowever, in an awful lot of cases this isnโt going to bring prices down, theyโll just get more expensive more slowly,โ she added.
โ Higher rates โ
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the latest figures โwarn that inflationary pressures in the UK are not under control and call for further rate hikes which will further squeeze the British householdsโ.
The BoE has already lifted borrowing costs to a 15-year high at 4.5 per cent in a bid to cool inflation.
This is set to rise further Thursday following a regular policy meeting in what would be the central bankโs 13th rate increase in a row.
โWe will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy,โ Hunt said.
The government wants to see inflation reduced to five per cent by the end of the year, which would be around half the level at the start of 2023.
โDespite a modest easing in food price inflation, headline inflation remains at high levels,โ noted YaelโฏSelfin, chief economist at KPMG UK.
โMore 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.โ
Despite easing to 18.4 perc
ent in May, annual food price inflation remains close to an all-time high.
At the same time, mortgage rates and rents are soaring, biting hard into disposable income for millions of Britons, as pay rises fail to keep pace with the annual inflationย rate.
AFP
