INFLATION AT HIGHEST RATE FOR FOUR YRS
Soaring energy prices hit
INFLATION soared to its highest level in nearly four years last month.
Rising living costs cranked up pressure on household finances in the wake of the Brexit vote.
The Office for National Statistics said Consumer Prices Index inflation reached 2.9% in May, up from 2.7% in April, and the highest level since June 2013.
Economists were shocked after expecting inflation to remain at 2.7%, but the Brexit-hit pound had pushed up the price of imported goods and energy.
The surge smashed past the Bank of England’s 2% target and will leave policymakers discussing raising interest rates back up above 0.25%.
The Bank’s governor Mark Carney warned last month that this year would see a “more challenging time for households”.
Maike Currie, investment director for personal investing at Fidelity International, said: “Our real income is being squeezed and we’re witnessing this impacting UK consumer spending.
“This is bad news for an economy which relies on confident consumers spending on goods and services. Already we are seeing signs of a stagnating economy.”
Rhys Herbert, Lloyds Bank Commercial Banking senior economist, said that “given other pressures, including domestic political uncertainty, interest rates still seem set to remain on hold for now”.