Fuel and food fire highest inflation rate for 40 years

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Rishi Sunak faces fresh calls for VAT cut after latest cost of living of 9.1%

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A sharp rise in food and fuel prices pushed inflation to a 40-year high on Wednesday, prompting renewed calls for ministers to do more to help cushion the cost of living crisis.

Official data from the Office for National Statistics shows inflation rose in 12 months to 9.1 percent in May – from nine percent in April and its highest level since 1982. But with the Bank of England warning that inflation could reach 11. At the end of this year, the government is now under increasing pressure to offer more aid for millions of struggling families.

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Asda President Stuart Rose urged ministers to reconsider and float the idea of ​​a VAT cut to reduce prices prompted by the post-Covid supply crisis and the Russian invasion of Ukraine. Lord Rose told the BBC: “I know the government is very reluctant to put its hands in its pocket again, because it has built up huge amounts of debt after Covid.”

“But it is a crisis of equal proportion, and people can be affected for much longer than Covid.

“So it is time to reconsider. I would urge them to do more and I would urge them to do more for the people who are on the lower end of the income scale.”

The ONS said the latest increase in inflation was mainly driven by food prices, which rose 8.7 per cent in the year to May. The greatest contribution was from bread, grain and meat.

But it added that the average price of petrol in May 2022 was 165.9p per liter as against 127.2p per liter a year ago.

With diesel and petrol prices hitting record highs in May, the ONS said the 12-month rate for motor fuels stood at 32.8 per cent, the highest since January 1989.

The war in Ukraine is likely to put pressure on prices in the coming months, and in yet another blow today, the RAC said petrol and diesel prices had hit new highs yesterday.

ONS Chief Economist Grant Fitzner noted “a steady rise in food prices and record high gasoline prices”, but also highlighted “the cost of goods leaving factories”, which he said, “for 45 years”. grew at their fastest rate”.

Rising raw material costs and factory prices have given rise to new fears that inflation could last longer, fueling demand for increased wages from workers in the public and private sectors.

Former Treasury Minister Lord O’Neill said the UK economy was in a “very fragile state”, saying on BBC Radio 4’s Today program that more persistent inflation could lead to the “terrible vicious circle of the 1970s”, causing the Bank of England may be forced to take even tougher measures. Action to control rising prices.

Last week it raised interest rates by 0.25 percentage points to 1.25 percent.

Chancellor Rishi Sunak is resisting calls by some cabinet colleagues and Tory lawmakers to cut income tax to ease the crisis.

The Office for National Statistics said inflation remained at a 40-year high in May.

Statisticians said consumer price index (CPI) inflation rose to 9.1 per cent in May from 9 per cent in April.

This growth is in line with analysts’ expectations.

“Although still at historically high levels, there was little change in the annual inflation rate in May,” said Grant Fitzner, ONS chief economist.

“The persistently sharp food price increase and record high petrol prices from this time compared to last year were offset by an increase in clothing prices and often fluctuating computer game prices.

“The price of goods leaving the factory grew at the fastest rate in 45 years, driven by broader food price increases, while raw material costs rose at the fastest rate on record.”

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The ONS said the change was driven largely by a rise in food prices, which added more than 0.2 percentage points to the inflation numbers.

Clothing and shoe prices helped control inflation, while entertainment and culture prices also dragged it down.

This news will add to the difficulties facing many across the UK. The energy bill for the average household rose 54% in early April and will remain at this level through October.

But forecasts released this week predict the government’s cap on energy bills could rise again in the autumn from an already record high of £1,971 to £2,980.

The Bank of England has predicted that inflation will rise by more than 11% in October after the price cap is changed again.

Shadow Chancellor Rachel Reeves said: “Today’s rising inflation is another milestone for those who continue to decline wages, growth and living standards.

“While rapid inflation is pushing family finances to the brink, the low wage spiral faced by many in the UK is not new.

“Over the past decade, Tory mismanagement of our economy has meant that living standards and real wages have failed to rise.”

Chancellor Rishi Sunak said: “I know people are concerned about the rising cost of living, which is why we have taken targeted action to help families, receiving £1,200 to the eight million most vulnerable families.

“We are using all the tools at our disposal to bring down inflation and counter rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy that does not contain inflationary pressures.” enhances, and further growth by enhancing our long-term productivity.”

The cost of electricity is not just filling the household electricity bills.

Gas, oil and other fossil fuels are needed to manufacture and transport many of the items that households buy each month.

When the price of fuel increases, so does the price of the final product.

Energy prices have risen in the past year. They initially began to grow as the global economy began to reopen and as energy demand grew after the pandemic.

Prices subsequently worsened, especially in Europe, when Russia launched a full-scale invasion of Ukraine in February.

Russia is one of the largest energy producers in the world.

Credit: www.standard.co.uk /

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