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06

Inflation rate hits four-year high

Open-access content 13th June 2017

Consumer price inflation in the UK increased from 2.7% in April, to 2.9% in May, according to figures released today by the Office for National Statistics (ONS).

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This is the highest rate recorded since June 2013, with rising prices for recreational and cultural goods and services the biggest contributor to the increase.

These include products such as computer games and package holidays, which collectively increased in value by 0.9% between April and May 2017, compared with a fall of 0.4% a year ago.

"The election showed that working people are struggling. And the biggest price rises in four years won't provide any comfort," TUC general secretary, Frances O'Grady, said.

"Working people are still £20 a week off worse, on average, than they were before the crash - and now rising prices are hammering their pay packets again."

How consumer price inflation has changed since May 2007 is shown below:

How consumer price inflation has changed since May 2007

There was also an increase in food and clothing prices, compared with a fall a year ago, while there was a significant upward effect from the price of electricity.

The largest downward contributor to inflation came from transport, with the costs of petrol and diesel falling for a third successive month, compared with price rises last year.

Air and sea fares fell by 6.4% and 10.8% respectively, with the ONS saying this was partly due to typical Easter increases falling in April this year rather than May.

The latest inflation figures are greater than average wage growth figures for March of 2.1%, with O'Grady calling on the government to step in as households feel their wages squeezed.

"The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK, and it's time to lift the artificial pay restrictions in the public sector.

"Our hardworking nurses and teachers are long overdue a pay rise."


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This article appeared in our June 2017 issue of The Actuary.
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