Soaring food prices pushed British consumer price inflation to a 40-year high of 9.1% last month. The highest rate out of the Group of Seven countries and underlining the severity of the cost-of-living crunch. The reading, up from 9.0% in April, matched the consensus of a Reuters poll of economists.
Historical records from the Office for National Statistics show May’s inflation was the highest since March 1982 – and worse is likely to come. Some investors judge Britain to be at risk of both persistently high inflation and recession. However, reflecting its large imported energy bill and continuous Brexit troubles. This could further hurt trade ties with the European Union.
Britain’s headline inflation rate in May was higher than in the United States, France, Germany and Italy. While Japan and Canada have yet to report consumer price data for May, neither is likely to come close.
The Bank of England said last week that inflation was likely to remain above 9% over the coming months. Before peaking at slightly above 11% in October, when regulated household energy bills are due to rise again.
Finance minister Rishi Sunak says the British government is doing all it can to combat a surge in prices. Prices for food and non-alcoholic drinks rose by 8.7% in annual terms in May. This was the biggest jump since March 2009 and made this category the biggest driver of annual inflation last month.
Overall consumer prices rose by 0.7% in monthly terms in May. The ONS said, a little more than the 0.6% consensus. British factory-gate prices are a key determinant of prices later paid by consumers in shops were 22.1% higher in May. This then a year earlier, the biggest increase since these records began in 1985, the ONS said.