More economic doom and gloom as inflation soars to 2.7%
FURTHER price hikes have underlined the continued pressures on consumers today, as rising fuel and air fares keep inflation stubbornly high.
The rate of consumer price inflation (CPI) increased to 2.7 per cent in May, up from 2.4 per cent in April, the Office for National Statistics (ONS) revealed today.
The rise, due to a record increase in airfares and higher fuel prices, was higher than analysts had optimistically predicted.
Airfares rose by 22 per cent between April and May, the highest increase since comparable records began in 2001.
Although food and drink prices fell, the price of clothing and footwear also rose by 1.2 per cent month-on-month, after a colder than normal May saw the cost of women's outdoor clothing increase.
TUC general secretary Frances O'Grady said Britain is set for a "joyless" recovery.
She said: "Britain's great wage squeeze shows no sign of abating.
"Forty consecutive months of real wage falls means people have less to spend on the high street, and are why economic green shoots are not being felt across the country."
Statman - Just what is the CPI anyway?
Inflation is set to peak in the coming months
The dire news is set to continue, with the Bank of England having said it anticipates inflation will exceed three per cent this year – with a peak expected over the next few months, ensuring further hardships for households.
Experts believe higher tuition fees and rising gas, electricity and water bills will heap further pain on consumers during the summer.
Ratings agency Moody's said: "Ongoing price pressures combined with austerity will squeeze household finances through 2013."
The figures come ahead of minutes due this week from the Bank of England's June interest rates meeting - outgoing governor Sir Mervyn King's last meeting - which will reveal the level of support for more economic stimulus.
The Bank's Monetary Policy Committee voted to hold its quantitative easing (QE) programme steady at £375 billion this month, also holding rates at 0.5 per cent, amid signs of improvement in the economy.
The Bank is expected to hold off more QE until the arrival of new governor Mark Carney next month.
