Skip to content 
Search

Latest Stories

High inflation hinders UK cost-of-living fight

The latest data is a blow for Rishi Sunak who has made cutting inflation a priority for his government

High inflation hinders UK cost-of-living fight

BRITAIN'S annual inflation rate unexpectedly remained at 8.7 per cent in May, official data showed on Wednesday (21), piling pressure on the Bank of England and government to act over the cost-of-living crisis.

Markets had forecast a drop from April's level, while the BoE was already widely expected to raise interest rates again on Thursday (22) to combat an inflation rate which is the highest among G7 nations.

The latest data is a blow also for Prime Minister Rishi Sunak, who has made cutting inflation a priority for his Conservative government heading into a general election next year.

Britain has endured months of strikes by workers demanding higher wages to help with the cost-of-living crisis.

"We know how much high inflation hurts families and businesses across the country," chancellor of exchequer Jeremy Hunt said following the latest consumer prices index data.

UK inflation had been expected to cool to 8.4 per cent last month while core inflation, which strips out food and energy costs, unexpectedly jumped to 7.1 per cent in May, said the Office for National Statistics.

"Core inflation rose again, to its highest rate in over 30 years," noted Sarah Coles, head of personal finance at Hargreaves Lansdown.

"Lower energy costs will eventually feed into prices across the board, and we should see the pain at the supermarket subside a little in the coming months.

"However, in an awful lot of cases this isn't going to bring prices down, they'll just get more expensive more slowly," she added.

Higher rates 

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the latest figures "warn that inflationary pressures in the UK are not under control and call for further rate hikes which will further squeeze the British households".

The BoE has already lifted borrowing costs to a 15-year high at 4.5 per cent in a bid to cool inflation.

This is set to rise further on Thursday following a regular policy meeting in what would be the central bank's 13th rate increase in a row.

"We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy," Hunt said.

The government wants to see inflation reduced to five per cent by the end of the year, which would be around half the level at the start of 2023.

"Despite a modest easing in food price inflation, headline inflation remains at high levels," noted Yael Selfin, chief economist at KPMG UK.

"More worryingly for the Bank of England, strong core inflation suggests that firms may now be passing on the rising costs from higher wage bills to consumers."

Despite easing to 18.4 per cent in May, annual food price inflation remains close to an all-time high.

At the same time, mortgage rates and rents are soaring, biting hard into disposable income for millions of Britons, as pay rises fail to keep pace with the annual inflation rate.

(AFP)

More For You

UK business district
The Canary Wharf business district including global financial institutions in London.
Getty Images

Bond yields ease following Starmer’s support for Reeves

THE COST of UK government borrowing fell on Thursday, partially reversing the rise seen after Chancellor Rachel Reeves became emotional during Prime Minister’s Questions.

The yield on 10-year government bonds dropped to 4.55 per cent, down from 4.61 per cent the previous day. The pound also recovered slightly to $1.3668 (around £1.00), though it did not regain all its earlier losses.

Keep ReadingShow less
modi-trump-getty
Modi shakes hands with Trump before a meeting at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)
Getty Images

Indian exporters watch closely as Trump says trade deal with India likely

THE US could reach a trade deal with India that would help American companies compete more easily in the Indian market and reduce tariff rates, President Donald Trump said on Tuesday. However, he cast doubt on a similar deal with Japan.

Speaking to reporters on Air Force One, Trump said he believed India was ready to lower trade barriers, potentially paving the way for an agreement that would avoid the 26 per cent tariff rate he had announced on April 2 and paused until July 9.

Keep ReadingShow less
Kolhapuri sandal sales surge in India post Prada controversy

Customers shop for 'Kolhapuri' sandals, an Indian ethnic footwear, at a store in New Delhi, India, June 27, 2025. REUTERS/Adnan Abidi

Kolhapuri sandal sales surge in India post Prada controversy

INDIAN footwear sellers and artisans are tapping into nationalist pride stoked by the Prada 'sandal scandal' in a bid to boost sales of ethnic slippers with history dating back to the 12th century, raising hopes of reviving a struggling craft.

Sales are surging over the past week for the 'Kolhapuri' sandals that have garnered global attention after Prada sparked a controversy by showcasing similar designs in Milan, without initially crediting the footwear's origins.

Keep ReadingShow less
UK business district
The Canary Wharf business district including global financial institutions in London.
Getty Images

Economy grew 0.7 per cent in Q1 2025, fastest in a year

THE UK economy expanded at its fastest pace in a year during the first quarter of 2025, driven by a rise in home purchases ahead of a tax deadline and higher manufacturing output before the introduction of new US import tariffs.

Gross domestic product rose by 0.7 per cent in the January-to-March period, the Office for National Statistics (ONS) said, confirming its earlier estimate. This was the strongest quarterly growth since the first quarter of 2024.

Keep ReadingShow less
modi-trump-getty
Trump shakes hands with Modi during a joint press conference at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)
Getty Images

Key issues in India, US trade talks

TRADE talks between India and the US have hit a roadblock over disagreements on duties for auto components, steel and farm goods, Indian government sources said to Reuters, dashing hopes of reaching an interim deal ahead of president Donald Trump's July 9 deadline to impose reciprocal tariffs.

Here are the key issues at play:

Keep ReadingShow less