UK inflation has increased to 9.1 per cent, the highest rate in 40 years, amid rising food prices.
The consumer prices index rose to 9.1 per cent in the 12 months to May this year, driven by rising prices for food and non-alcoholic beverages, according to the Office for National Statistics.
RPI, which measures the changes in retail prices of a basket of goods and services, as opposed to the weighted average prices tracked by the CPI, rose 11.7 per cent, up from 11.1 per cent in April.
Food and non-alcoholic beverage prices rose by 1.5 per cent between April and May 2022, compared with a fall of 0.3 per cent in the same period a year ago.
Andrew Tully, technical director at Canada Life, said: “Today’s inflation numbers will leave households across the UK reeling from the spiralling cost of living increases. With inflation expected to peak into double-digits later in the year, this cloud has no silver lining.
“Research tells us people are already changing their behaviour and tightening their belts, but the inflation peak, when it comes, only tells half the story. How long inflation remains high will determine our living standards for years to come.”
Scottish Friendly savings specialist, Kevin Brown, said despite a multitude of consecutive interest rate rises, inflation is still yet to peak.
“One of the biggest drivers of inflation continues to be energy price rises. This is counterintuitive because our energy costs are supposed to fall over the summer months as households turn the heating down, but that is not to be this year,” he said.
“Indeed, the latest predictions are pointing to another 50 per cent rise in the price cap this autumn, taking energy bills over an astonishing £3,000 a year for a typical household. The cap, remember, was still at just £1,277 in March.”
Brown said talk of a wage-price spiral seems “a little optimistic” at this point considering wages are falling 2.3 per cent in real terms.
“Households are finding the situation more and more difficult to manage,” he said. “The difference between private and public sector earnings is even more considerable with public sector pay falling 7.6 per cent vs 1.1 per cent for the private sector.”
“Anyone looking to save for the long-term needs to think carefully before leaving wealth languishing in cash.”
Earlier this month, the Bank of England raised interest rates to 1.25 per cent in a bid to tackle the soaring rate of inflation.
At the time, the BoE said it expected CPI to be more than 9 per cent during the next few months and to rise to slightly above 11 per cent in October.
Abrdn adviser and strategic director Jonny Black, said: “Clients have now spent half the year watching inflation soar, and hearing nothing but forecasts of even higher rates to come.
“In these uncertain times, confidence is a hard thing to come by. Many clients will, understandably, have serious concerns about what this means for their finances – particularly those relying on their savings or investments.