Inflation rose to a new 40-year record high of 9.1% in May, according to the latest figures from the Office of National Statistics (ONS).
The Consumer Price Index (CPI) increased by 0.1% from 9% in April to 9.1% in May, with climbing food and non-alcoholic beverage prices highlighted as the largest contributor to the new record.
The ONS also noted an 11.7% rise in Retail Price Index (RPI) inflation, marking another 40-year record for consumers across the UK.
Meanwhile, the Consumer Prices index including owner occupiers’ housing costs increased by 7.9%, with the climbing prices of fuel and electricity driving expenses higher, representing the highest level since the 1991 rate of 8% and the highest level since National Statistics series records began in 2006.
Inflation gains ground
The Bank of England revised its inflation estimate from a peak of 10% to 11% in October this year, so while the UK has yet to hit the dreaded double-digits, experts warned that it isn’t far behind.
Analysts further highlighted that the Bank’s recent interest rates hike to 1.25% did little to stamp out rising inflation, and households are bracing for worse yet to come once summer makes way for colder weather in autumn.
“On a monthly basis, CPIH rose by 0.6% in May 2022, compared with a rise of 0.5% in May 2021 continuing to show the alarming rate of inflation the Bank of England has been unable to contain,” said XTB chief market analyst at XTB.
“This along with the energy cost crisis could prove to be significant issues for the economy to overcome and could begin to show its true effects on demand in the near future.”
AJ Bell head of personal finance Laura Suter added: “A slight uptick in inflation in May to 9.1% means that the UK public have been spared double digit inflation for now, but it’s just around the corner.”
“Soaring food costs are also playing their part, with the annual supermarket bill estimated to have risen by almost £400 as a result. Hardest hit were bread, cereals and meat, as they all suffered from the impact of the Ukraine/Russia crisis on grain supplies.”
“Food inflation is expected to increase again in June’s figures, partly due to the ongoing increase in prices and partly because the nation splashed out on fancier food during the Jubilee celebrations.”
Energy costs climb
Rising energy costs have sent inflation skyrocketing as well, with the price of Brent Crude oil remaining well beyond the $100 per barrel mark as scarcity concerns persist.
“Once again fuel is the factor driving inflation higher, from home energy bills to petrol and diesel prices pushing up transport costs,” said Suter.
“As a result of rising energy costs, the 12-month inflation rate for electricity is 53.5% and for gas is an eye-watering 95.5%. And May saw another record broken, with the largest increase in transport costs since records began in 2006.”
“As a result of petrol and diesel prices hitting new records in May, the 12-month inflation rate for motor fuels hit the highest rate since 1989 – when the figures were first calculated.”
More pain to come
Consumers were warned to brace for even more pain this winter, with the energy price cap estimated to hit £3,000 in October as the cold weather sets in, draining household budgets as inflation reaches its anticipated peak.
“Unfortunately, more gloom lies ahead, and the hopes of inflation ebbing away later this year are dead,” said Suter.
“Energy costs will drive inflation higher later this year, with the latest estimates showing that the energy price cap will now rise to £3,000 in October, far more than many had expected, and that it won’t fall in the January update either.”
“It means one thing is for certain, this rising inflation isn’t going away any time soon and this coming winter could be tougher than the last.”