Rising food and motoring costs sent the UK inflation rate to a 40-year high of 9.1% today.
Along with May’s CPI figures, the Office for National Statistics said the price of goods out of factories increased at the fastest rate in 45 years.
With the Bank of England warning that inflation is expected to reach 11% later this year, October’s review of energy price caps is a big factor.
Inflation at 40-year high
Britain’s economy is on a “knife’s edge” as inflation hits a 40-year high, business groups warned today.
Inflation is at its highest level since March 1982, rising to 9.1% in May, official data showed.
This puts new pressure on the Bank of England to raise interest rates and on employers to provide new wage deals for workers.
The Office for National Statistics said the cost of food, energy and petrol are still rising.
Inflation rose from 9% per annum in April to 9.1% in May.
Economists say it will drop to 10% or maybe 11% before falling.
David Bharrier in the British Chambers of Commerce said:
“A further rise in consumer price index inflation to 9.1% underscores the serious pressure that is on businesses and households. Inflation is set to move, with the energy price cap rising yet, leaving businesses with labor shortages as well as growing economic uncertainty. An immediate way to ease the pressure on firms would be to reduce VAT on commercial energy bills to 5%. ,
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US markets rise, Brent crude prices fall
Tesla shares jumped 9% and big tech names including Apple and Google owner Alphabet were off more than 3% as US markets rallied on their return from the long weekend.
The Dow Jones Industrial Average, which hit bear market territory last week, was up 2% and the tech-focused Nasdaq gained 2.5% as stock market sentiment looked to stabilize after last week’s bearish-driven selloff. indicated.
There is likely to be a pause in Wall Street’s rebound today, especially with Federal Reserve Chairman Jerome Powell due to testify before Congress today.
Traders will be on the lookout for any further signs that the Fed plans to repeat last week’s 75 basis point hike in interest rates at its next meeting in July.
European markets will also open lower above $110 a barrel under the influence of weak Asia trade and a 3.5% fall in Brent crude prices.
Oil giants BP and Shell are likely to weigh in on London’s top flight as CMC Markets expects the FTSE 100 index to open 70 points at 7082.
Credit: www.standard.co.uk /