Inflation rates remain unchanged at 8.7% in May as cost of living crisis continues

Inflation rates have not fallen, which means inflation will go up again, ITV News Business and Economics Editor Joel Hills report

Inflation rates remained unchanged last month, defying expectations that they would drop and heaping further pressure on households.

The Office for National Statistics said Consumer Prices Index inflation (CPI) remained at 8.7% in May, the same as it had been in April.

The ONS said rising prices for plane tickets, recreational and cultural goods and services and second-hand cars added the most to inflation.

Costs for motor fuel fell, the ONS said, putting the biggest downward pressures on inflation.

The ONS also said that the increase in food prices slowed from 19.1% in April to 18.4% in May after hitting a 45-year high in March.

The increase in the price of milk, cheese and eggs eased the most, the ONS said, while fish was the only food item whose cost increased, largely driven by the price of canned tuna.

The news means added pressure for households. Figures from the Money Advice Trust show that since March 2022 the number of adults who are behind on one or more household bill has risen from 7.9 million to 11.6 million.

ONS chief economist Grant Fitzner said: “After last month’s fall, annual inflation was little changed in May and remains at a historically high level.

“The cost of air fares rose by more than a year ago and is at a higher level than usual for May.

“Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high.”

The news is likely to put more pressure on interest rates too.

Decision-makers at the Bank of England are meeting this week to look at rates.

The Bank is tasked with keeping inflation as close to 2% as it can, and the best tool it has to do that when inflation is high is by putting up interest rates.

But this is likely to pile even more pressure on mortgage-holders as rates are already at close to 15-year highs.

The likelihood of the Bank hiking rates further will be exacerbated by so-called core CPI, which rose to 7.1% in May from 6.8% in April.

The figure – which excludes the price of energy, food, alcohol and tobacco – is often more in focus for the Bank’s decision-makers when they set interest rates.

Chancellor Jeremy Hunt said the government was taking “difficult decisions” to balance the books following the pandemic and Vladimir Putin’s invasion of Ukraine.

“We rightly spent billions to protect families and businesses from the worst impacts of the pandemic and Putin’s energy crisis,” the Chancellor said.

“But it would be manifestly unfair to leave future generations with a tab they cannot repay.

“That’s why we have taken difficult but necessary decisions to balance the books in order to halve inflation this year, grow the economy and reduce debt.”

Shadow chancellor Rachel Reeves said: “This Tory government can’t get a grip of this problem because they are the problem.

“Thirteen years of the Tories and their disastrous mini-budget are damaging our economic security and leaving families worse off.

“Simply continuing on this Tory path of managed decline is not the summit of Labour’s ambition.

“We need a more secure economy, more secure family finances and a plan to help us grab hold of the opportunities before us.

“With a relentless focus on the cost of living, our strong fiscal rules and our mission for growth, that is what a Labour government will bring.”

Meanwhile, Liberal Democrat Treasury spokeswoman Sarah Olney accused the Chancellor of sitting on his hands while inflation drives up interest rates, hitting mortgage holders.

In response to the inflation data, she said: “These worse-than-expected figures show the Government is failing miserably to bring inflation down and provide relief for struggling families facing soaring bills.

“Homeowners now face the likelihood of even more interest rate hikes adding to their monthly mortgage payments all while the Chancellor just sits on his hands.

“It beggars belief that ministers are refusing to support hard-pressed families when it’s this Conservative government’s catastrophic failure to run the economy that caused this crisis.

“This must be the most uncaring government to ever walk into Downing Street. It’s as if ministers are living on another planet.”

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