Zhitong Finance APP learned that the British CPI annual rate in May reached 9.1%, consistent with expectations, the previous value was 9%; the British CPI monthly rate in May was 0.7%, expected 0.6%, the previous value was 2.5%. British inflation rose to a 40-year high in May after widespread increases in the cost of everything from fuel and electricity to food and drink. The annual core CPI rate in the UK in May reached 5.9%, which was expected to be 6% and the previous value was 6.2%.
The annual rate of the British retail price index in May reached 11.7%, expected to be 11.4%, and the previous value was 11.1%. And there are more signs that inflationary pressures are building on the wholesale side, with raw material costs rising at record highs.
Although the increase is smaller than in recent months, the figures still highlight the inflation crisis facing the UK. Things will get worse later this year when another round of energy price increases begins. The Bank of England predicts that the annual CPI rate in October will exceed 11%.
Dan Hanson of Bloomberg Economics said: "The Bank of England said it would respond to signs of continuing to increase inflationary pressures through 'strong action', opening the door to more than 25 basis points of interest rate hikes. Today's inflation data does not help. We expect inflation to pick up in the coming months as higher food and fuel prices push up annual inflation, which may not arrive until October, when UK energy regulator Ofgem The cap on energy prices will be raised again."
UK CPI in May was driven by rising food and non-alcoholic drink prices, in stark contrast to falls a year ago. Rising prices for electricity, natural gas and other fuels, motor fuel and used car prices also contributed significantly to the overall figure.
The UK’s non-seasonally adjusted PPI annual rate in May reached 22.1%, expected to be 19.4%, and the previous value of 18.6%, which was the largest increase since records began in 1985. The UK's non-seasonally adjusted output PPI annual rate in May was a full percentage point higher than expected, reaching 15.7%, the highest level since 1977.
Runaway inflation has created a turbulent summer for the Bank of England and Prime Minister Boris Johnson's government. About 60% of adults said they spent less on non-essential items due to rising prices.
British Chancellor of the Exchequer Sunak said: "I know people are worried about the rising cost of living, which is why we are taking targeted action to help families. We are using all the tools at our disposal to reduce inflation and combat price rises. No Fiscal policy that will increase inflationary pressures will be part of the solution, meaning the government will tightly control pay agreements with public sector workers.”
The British economy is about to contract for the first time since the epidemic, and consumers will see their incomes hit by 20. A series of rail strikes have brought the UK to a standstill this week in the worst squeeze on in years.
While Johnson has introduced a series of measures to help offset some of the rise in energy bills, the British government has said increasing wages to combat inflation is not an option. Johnson said on Tuesday the government was seeking to impose pay limits on public sector workers that would otherwise push prices higher.
At the same time, the Bank of England is raising interest rates at an unprecedented pace, exacerbating some short-term headwinds for household consumption. The Bank of England says it can't stop prices from surging this year.
The Bank of England has announced five consecutive interest rate increases, and the market expects interest rates to reach 3% before the end of this year. UK chief economist Huw Pill said that UK policymakers will sacrifice economic growth to reduce inflation, and prices are likely to develop a "self-sustaining momentum".
Yael Selfin, chief economist at KPMG UK, said: "There are no signs of a fall in inflation yet. Inflation continues to rise, mainly driven by external factors, with price increases spreading broadly across the economy."
