Inflation has remained at 8.7 per cent in the 12 months to May, a day before the Bank of England decides whether to raise interest rates for the 13th time in a row.
Core CPI - which excludes more volatile prices - rose from 6.8 per cent to 7.1 per cent over the period, which is the highest reading since 1992.
Higher prices for air travel and recreational goods and services were a contributor to the increase in inflation.
Mazars chief economist George Lagarias said: "There’s no way to sugar-coat this, 8.7 per cent is a bad number.
“Inflation has become entrenched and remains high versus other developed market economies.
“This number will compel policymakers, the government and the Bank of England, to further clamp down on consumption, in order to break the wage-price spiral.
“We expect that growth will further decelerate, possibly even pushing the economy past the recession threshold, even as early as the autumn”
Wealth Club head of investment research Jonathan Moyes said the data could encourage the Bank of England to raise interest rates by 0.5 per cent rather than the 0.25 per cent that was expected.
St James’s Place director partner engagement and consultancy Alexandra Loydon added: “There is little scope for easing the pressure on borrowers and it is particularly stark for those on variable rate mortgages.
“As for investors, they will need to continue to diversify their portfolios to ensure they are as inflation-proofed as they can be and can reduce risk when markets are volatile.”
SmartSave founder and chief executive Andy Mielczarek said: “As inflation remains stubborn at 8.7 per cent, high prices and doggedly-low interest rates on savings accounts from high street banks mean that millions of savers are still losing money in real terms - potentially hundreds of pounds a year."
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
