Economy

Inflation hits 40-year high in May 

This was largely driven by food and non-alcoholic beverages, transport and housing, water, electricity, gas and other fuels

Inflation reached a 40-year high in May 2022 as the Consumer Price Index hit 9.1%, up from the 9% reported in April 2022. 

This was largely driven by food and non-alcoholic beverages, transport and housing, water, electricity, gas and other fuels.

Food price inflation was driven largely by staples with “bread and cereals”, “meat”, and “oil and fats” seeing the largest increases in contribution between April and May 2022.

The ONS found that high inflation affected different households differently depending on a range of factors including their expenditure patterns and their ability to absorb increased spending.

Higher income households saw a “considerably higher” contribution from transport, for example, reflecting the types of transport used by those with different income levels. Higher income households typically used cars more than public transport and were more likely to experience the high price increases seen for motor fuels over the last year.

Higher income households also had higher contributions from restaurants and hotels, and recreation and culture, due to having more disposable income to spend on eating out and recreational activities.

Between 25 May and 5 June 2022, 88% of adults reported that their cost of living had increased over the last month, a considerable increase from the 62% of adults reporting the same between 3 and 14 November 2021.

Commenting on the latest findings, the ONS said: “The main drivers of consumer price inflation over recent months have been energy, transport and food. These make up a large part of essential spending for most households and have a relatively low price elasticity of demand as there is a limit to how much consumers can reduce their consumption of food, energy and transport, even as prices rise. 

“As such, when prices for these essentials increase, consumers may be forced to reduce spending elsewhere to maintain at least a minimum level of consumption of the essentials. This is likely to have a disproportionate effect on lower income households as they have less disposable income that can be switched from non-essential spending to cover necessities.”

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