Double-digit rate expected: UK inflation hits 40-year high

Consumers in the UK are groaning under high inflation.

Double-digit rate expected: UK inflation hits 40-year high

Consumers in the UK are groaning under high inflation. Prices rose again in May. The central bank is resisting the development, which could become a political problem for Prime Minister Johnson. Because one in four Britons is starting to skip meals.

Consumer prices in the UK rose at their highest rate since 1982 in May. Goods and services cost an average of 9.1 percent more than a year earlier, according to the Office for National Statistics in London. Economists had expected this after inflation had already reached 9.0 percent in April. Rising food prices in particular drove inflation up this time: At 8.7 percent, they rose more than they had in over 13 years.

Experts see the risk of persistently high inflation coupled with a simultaneous recession - triggered not only by high energy prices but also by ongoing Brexit problems. These could further affect trade relations with the EU. "With the economic outlook so unclear, nobody knows how high inflation could get and how long it will last - which makes assessing fiscal and monetary policy particularly difficult," said economist Jack Leslie of the Institute Resolution Foundation.

"We are using all tools at our disposal to reduce inflation and combat rising prices," Finance Minister Rishi Sunak said. "We can build a stronger economy through independent monetary policies, responsible fiscal policies that do not increase inflationary pressures, and increasing our long-term productivity and growth."

Last week, the Bank of England raised interest rates for the fifth time in seven months in order to alleviate price pressure. It is now at 1.25 percent. This should return the rate of inflation to the target of 2 percent set by the monetary watchdogs in the medium term and on a sustainable basis. However, the central bank expects prices to continue to rise for the time being: for October, for example, they expect an inflation rate of 11 percent.

According to a survey by the Ipsos institute, the rapidly rising cost of living is hitting the island's citizens hard: according to this, two out of three Britons are turning off the heating to save costs. More than a quarter of respondents even said they skip meals because of their tight budgets. This situation is increasing popular dissatisfaction with the government of Conservative Prime Minister Boris Johnson. At the same time, calls are getting louder for increasing social assistance in order to relieve poorer sections of the population in view of the rapidly rising cost of living.

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