Inflation jumps to 2.9% in May as it hits new four-year high
Figures from the Office for National Statistics (ONS) said that the Consumer Price Index (CPI) hit 2.9 per cent in May
BRITISH household finances face a further squeeze as inflation hits a new four-year high.
Figures from the Office for National Statistics (ONS) said that the Consumer Price Index (CPI) hit 2.9 per cent in May - up from in 2.7 April.
The rate is above the Bank of England 2 per cent target and the highest since June 2013.
Prices were pushed by the cost of recreational and cultural goods and services with prices rising, overall, by 0.9 per cent between April and May 2017.
Within this category the main contributor to the increase in the rate came from games, toys and hobbies, particularly computer games.
Food prices also rose slightly between April and May this year, with sugar jam and confectionery markets mainly responsible.
There were also rises in the price for clothing, furniture and household goods.
Inflation in the UK economy has been pushed by the slump in the value of the pound following the EU referendum in June last year.
Rising inflation is squeezing living standards as prices rose faster than wages.
Richard Lim, Chief Executive, Retail Economics said the impact of a weaker pound continues to feed through to households.
"This confirms that real earnings are well and truly shrinking. With underlying conditions for households set to weaken even further in the coming months, confidence will be further damaged by heightened political uncertainty and legitimate concerns over what form Brexit is likely to take," he said.
Hannah Maundrell, Editor in Chief of , said:“We’re now starting to feel the real impact of Brexit on our wallets. There’s no escaping the fact that the luxury of low inflation is well and truly over with prices of goods and services rising left right and centre and the shiny new pounds in our pockets will unfortunately buy you less.
WHAT HAPPENS WHEN INFLATION RISES?
PRICES will go up for most things – clothing, food, travel…the cost of living will get a bit more expensive.
These rises have been fuelled by the weak pound and it means those on the lowest incomes will be hit hardest.
It means that not one of the 750 standard savings accounts on the market now beat inflation.
Here's how you can protect yourself against rising inflation:
- check you’re on a fixed rate energy tariff (one that guarantees the price you pay per unit) and if not switch
- make sure your savings are earning an interest rate that’s higher than the rate of inflation – otherwise they’ll lose buying power over time – you might need to think about high interest current accounts
- shop around for food and fuel so you’re not paying any more than you need to
- check whether you could cut your mortgage repayments by switching to a fixed rate deal if you’re on your lender’s standard variable rate
“Your household budget will be stretched as the cost of energy is creeping up and the price of games, toys and hobbies – having fun - has also risen. The cost of your supermarket shop is rising too so you must act now to protect yourself from future struggles.”
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