UK inflation rises at fastest rate for 40 years as food costs jump

Image source, EPA

Food costs are climbing, particularly for bread, cereals and meat, as prices continue to rise at their highest rate in 40 years.

In the year to May, the UK's inflation rate increased to 9.1% from 9% in April.

Fuel and energy prices are the biggest drivers of inflation.

Workers and unions are trying to get pay raises.

Employers are warned against giving out big increases in salaries over fears of a 1970s style "inflationary spiral" where firms hike wages and then pass the cost onto customers.

The Bank of England has warned that inflation will reach 9% this year, which is the highest level since March 1982.

The rate at which prices are increasing is called inflation. Milk inflation is 5% if the price of a bottle of milk goes up by 5p.

In a survey commissioned by the British Broadcasting Corporation, more than 4,000 people said they thought their wages should go up.

It costs more than £100 to fill an average family car with petrol as a result of fuel price rises in June.

Rail workers went on strike on Tuesday and will go on strike on Thursday and Saturday in a dispute over pay and conditions.

Employers have offered a maximum of 3% while the Rail, Maritime and Transport union wants a 7% pay rise.

Unison accused the ministers of living on another planet for talking about public sector pay restraint.

Jon Richards said that under-pressure health, care, school and council services desperately need staff to be given a pay boost.

Potential industrial action over pay is being warned by the largest teachers' union.

The National Education Union does not agree with the government's proposal for a 3% pay increase for most teachers.

"We need to stop making the problem worse by making pay demands that will only see inflation stay higher for longer and that hurts the poor the most," said Dominic Raab.

Inflation was caused by rising prices for food and non- alcoholic beverages.

Russia's war in Ukraine has severely restricted wheat and maize supplies, which are used to make bread and cereals.

The costs of alternatives have gone up due to the fact that Ukraine is a major producer of sunflowers oil.

The average grocery bill in the UK is expected to go up by more than $400 this year, according to a report.

Some shoppers are setting limits at checkouts and petrol pumps in order to save money, according to the supermarket.

The cost of goods leaving factories rose at their fastest rate in 45 years in May, with the cost of raw materials at a record high.

He said the steep rises in food and petrol prices in May had been caused by the price of clothes rising less than they did last year and a drop in computer game costs.

House prices in the UK increased by 12.4% in the year to April, with the average price now being more than $31,000 higher than last year.

"After families pay for essentials, the amount of spare cash left over to spend on days out, socialising and other treats is decreasing at an astonishing rate", said Richard Lim, chief executive of Retail Economics.

Georgia said she was having to reduce her trips with her daughter as a result of the price rises.

I can't afford to go to Sea Life Centres. She said that it was £25 a ticket. I'm not able to go out as much as I used to. I don't have the money to pay for it.

The Chancellor said that the government was using all the tools at its disposal to bring inflation down.

The package of measures provided by the government is worth over 15 billion dollars.

The country needs more than "sticking plasters to get us back on course", said the shadow chancellor.

The chancellor has hiked taxes time and time again, refusing to slash them to help with the cost of living emergency.

The relentless rise in prices is not going to be stopped. The rate of increase in inflation appears to have slowed, but this is just a pause for breath. Further records in petrol prices and a renewed surge in the price of internationally traded gas after a fire at a US gas terminal means a hot summer and tricky Autumn.

The impact of a fall in sterling is helping to explain why UK inflation is higher than the rest of the G7.

It is disastrous for the personal finances of millions of households because of inflation. "Squeeze" doesn't capture how some working families are having their disposable income wiped out by monthly energy direct debits, or asking cashiers to stop the till at a higher price.

The data may not be enough for the Bank of England to act forcefully in August. We are at a critical moment for the jobs market and they will watch the evolution of wage settlements.

With vacancies at records, unions see a one-off opportunity to increase wages, and will continue to push for double digit rises. Employers and the government will resist, but workers may be able to negotiate.

Raising interest rates is one way to slow the rise in prices. The goal is to increase the cost of borrowing and encourage people to save more.

The Bank of England recently raised UK interest rates from 1% to 1.25% in order to slow the pace of soaring prices.

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