Consumer Price Inflation in UK reached a 40-year high of 9.1 percent last month, the highest rate among the G7 nations and highlighting the depth of the cost-of-living crisis. Soaring food costs were a major factor in this increase.
The reading, which increased from 9.0 percent in April, was in line with the opinion of analysts surveyed by Reuters. May’s inflation was the biggest since March 1982, according to historical data from the Office for National Statistics, and it’s expected to become worse. Sterling, one of the worst-performing currencies this year against the US dollar, dropped below $1.22 on the day, losing 0.6 percent.
Given its high energy import cost and ongoing Brexit issues, which could further harm trade relations with the European Union, some investors believe that Britain faces a danger of both chronically high inflation and recession.
“With the economic future so murky, no one knows how high inflation could go, and how long it will persist for – making fiscal and monetary policy choices very tough,” said Jack Leslie, senior economist at the Resolution Foundation think tank.