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UK inflation rises at fastest rate for 40 years as food costs jump - Perthshire Chamber of Commerce

UK inflation rises at fastest rate for 40 years as food costs jump

FROM SCC NETWORK

Prices are continuing to rise at their fastest rate for 40 years with food costs, particularly for bread, cereal and meat, climbing.

UK inflation, the rate at which prices rise, edged up to 9.1% in the 12 months to May, from 9% in April, the Office for National Statistics (ONS) said.

Fuel and energy prices are the biggest drivers of inflation, but the ONS said food costs had pushed it up further.

Workers and unions are pushing for pay rises to cope with higher prices.

But the government has warned against employers handing out big increases in salaries over fears of a 1970s style "inflationary spiral" where firms hike wages and then past the cost onto customers through higher prices.

Currently, inflation is at the highest level since March 1982, when it also stood at 9.1% and the Bank of England has warned it will reach 11% this year.

Grant Fitzner, chief economist at the ONS, said "widespread food price rises" meant the cost of goods leaving factories had risen at their fastest rate in 45 years in May, with the cost of raw materials at the highest on record.

But he said the steep rises in food and record high petrol prices in May had been stemmed by the price of clothes rising less than they did this time last year, along with a drop in computer game costs.

The ONS also revealed average UK house prices increased by 12.4% in the year to April, with average prices now £281,000, £31,000 higher than this time last year.

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