Flights, food and fuel: What you need to know about the latest inflation figures

Soaring prices for flights, food, and fuel drive inflation to a new multi-decade high, squeezing household budgets and forcing the central bank's hand. | Contesto: cronaca

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• Flights, food and fuel: What you need to know about the latest inflation figures

Contesto

Inflation surged to a 40-year high of 9.1% in the 12 months to May, driven by punishing increases in the cost of essential goods and services, according to the latest official figures. The data, released Wednesday, confirms that the cost-of-living crisis is intensifying, with airfares, food, and motor fuel identified as the primary drivers pushing the Consumer Prices Index (CPI) to its highest level since 1982. The breakdown of the figures reveals the breadth of the pressure on household finances. Airfares saw a dramatic annual increase, reflecting surging demand and higher jet fuel costs. At the supermarket, prices for staples including milk, cheese, and eggs rose sharply. Perhaps most visibly, the cost of filling a vehicle's tank continued its relentless climb, with average petrol prices reaching new records. This triad of expenses—transport, sustenance, and energy—forms the core of monthly spending for most families, leaving little room to absorb the shocks. The immediate implications for consumers are stark. For borrowers, particularly those on variable-rate mortgages or with other debts tied to the Bank of England's base rate, the news is ominous. The central bank is widely expected to respond to the persistent inflation by raising interest rates again at its next meeting, which will increase monthly repayment costs for millions. Savers, meanwhile, find their deposits eroded in real terms, as the interest rates offered on most standard accounts remain far below the rate of inflation, effectively shrinking the purchasing power of money held in banks. Economists point to a confluence of global and domestic factors sustaining the inflationary surge. The war in Ukraine continues to disrupt global energy and grain markets, while ongoing supply chain bottlenecks and a tight labor market are adding domestic cost pressures. These elements have created a perfect storm that policymakers are struggling to contain. The government has pointed to one-off support packages for energy bills, but critics argue these measures are insufficient to bridge the growing gap between incomes and prices for the long term. The critical question now is how high inflation will...

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Categoria: cronaca