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Inflation in fuel and food was the highest in 40 years

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The sharp rise in food and fuel prices brought inflation to a 40-year high on Wednesday, prompting new calls for ministers to do more to help ease the cost of living crisis.

Official figures from the Office for National Statistics show that in the 12 months to May, inflation reached 9.1 percent, up from nine percent in April and the highest since 1982. But with a warning from the Bank of England that inflation could reach 11 per cent later this year, the government is under increasing pressure to offer more support to the millions of families in need.

Asda Chairman Stuart Rose called on ministers to reconsider and voiced the idea of ​​lowering VAT to reduce spiraling prices due to cuts in supplies after Covid and the Russian invasion of Ukraine. “I know the government is very reluctant to put its hand in its pocket again because after Covid it has amassed a huge amount of debt,” Lord Rose told the BBC.

“But it’s a crisis of this magnitude, and people can be affected for much longer than Covid has affected us.

“So it’s time to rethink. I would encourage them to do more, and I would encourage them to do more for those people who are at the bottom of the income scale. ”

The ONS said the recent rise in inflation was largely driven by food prices, which rose 8.7 percent in the year to May. The largest contributions were from bread, cereals and meat.

But he added that the jump in fuel prices was also behind the inflation jump: average gasoline prices were 165.9 pensions per liter in May 2022 compared to 127.2 pensions per liter a year earlier.

Due to the fact that the price of diesel and gasoline reached record highs in May, the ONS said that the 12-month rate on motor fuel was 32.8 percent, which was the highest figure since January 1989.

The war in Ukraine is likely to put pressure on prices in the coming months, and once again today the RAC said that prices for gasoline and diesel yesterday reached new highs.

ONS chief economist Grant Fitzner noted “continued sharp rise in food prices and record high gasoline prices,” but also stressed “the cost of goods leaving factories,” which he said was “growing at the fastest pace in 45 years.”

Rising commodity prices and factory prices have led to new fears that inflation may remain higher for longer, leading to more calls for higher wages by public and private sector workers.

Former Treasurer Lord O’Neill has said the UK economy is in a “very fragile position”, adding on BBC Radio 4 Today that more sustained inflation could lead to a “terrible vicious circle of the 1970s”, forcing the Bank of England to go even harder. actions to curb rising prices.

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

Chancellor Rishi Sunak opposes calls by some cabinet colleagues and Tory MPs to cut income taxes to ease the crisis.

Bet with inflation rose again in May, remaining at a 40-year high Office of National Statistics said.

Consumer price index (CPI) inflation rose from 9 percent in April to 9.1 percent in May, according to statistics.

The increase is in line with what analysts expected.

“Although annual inflation rates remain at historically high levels in May,” said ONS chief economist Grant Fitzner.

“The continued sharp rise in food prices and record high gasoline prices have been offset by clothing prices, which have risen less than last year, and falling volatile prices for computer games.

“The cost of goods leaving factories has grown at the fastest pace in 45 years, driven by widespread food prices, while the cost of raw materials has jumped at the fastest pace in history.”

Images of the press association

The change was largely due to rising food prices, which added inflation by more than 0.2 percentage points, the ONS said.

Prices for clothing and footwear helped curb inflation, while prices for leisure and culture also pulled it down.

The news will add to the difficulties faced by many people across the UK. Electricity bills rose by an average of 54% in early April and will remain at that level until October.

But forecasts released this week predict that the government’s restriction on energy bills could rise again from the already record high of £ 1,971 in 1971 to £ 2,980 in the autumn.

The Bank of England has forecast that inflation will rise by more than 11% in October after prices change again.

Shadow Chancellor Rachel Reeves said: “Today’s inflation is another milestone for people who are watching as wages, growth and living standards continue to fall.

“While rapid inflation is pushing the family’s finances to the limit, the spiral of low wages that many in Britain are facing is not new.

“Over the last decade, poor Tory governance in our economy has led to living standards and real wages not rising.”

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

“We are using all the tools at our disposal to reduce inflation and fight rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policies that do not contribute to inflationary pressures, and by improving our long-term productivity. . and growth. “

The price of energy is not only combined with the electricity bills of households.

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

As the price of fuel rises, so does the price of the final product.

Energy prices have risen over the past year. Let’s start with the fact that they started to grow when the world economy started to recover and the demand for energy grew after the pandemic.

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

Russia is one of the world’s largest energy producers.

Inflation in fuel and food was the highest in 40 years

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