UK inflation hits new 40-year high in May, highest in G7

Soaring food prices pushed British consumer price inflation to a new 40-year high last month of 9.1 per cent, 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 per cent 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.

“Rising inflation is putting further pressure on policymakers to ease the burden on households, while complicating the Bank of England’s task,” Yael Selfin, chief economist at KPMG UK, said.

The Bank of England said last week that inflation was likely to remain above 9 per cent over the coming months before peaking at slightly above 11 per cent in October, when regulated household energy bills are due to rise again.

The British government is doing all it can to combat a surge in prices, finance minister Rishi Sunak said in response to the data.

Prices for food and non-alcoholic goods rose by 8.7 per cent in annual terms in May – the biggest jump since March 2009 and making this category the biggest driver of annual inflation last month.

Overall consumer prices rose by 0.7 per cent in monthly terms in May, the ONS said, a little more than the 0.6 per cent consensus.

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 are likely to come close.