HE The UK 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%. ,
The Chancellor of the Exchequer, 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, with the eight million most vulnerable families getting £1,200. Using all the tools at our disposal to counter rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy that does not increase inflationary pressures, and our long-term productivity by increasing and increasing.”
Rachel Reeves MP, Labor’s Shadow Chancellor of the Exchequer, 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.”
Credit: www.standard.co.uk /