Worries over living standards as inflation hits highest level since April 2012
Consumer price inflation has hit its highest level since April 2012, sparking concerns about falling living standards.
Today’s announcement will follows a recent OECD report warning that British workers' wages may fail to keep pace with price rises over the next 18 months.
The CPIH index was up 2.7% in May compared to 12 monts previously, with a rise in the price of games and toys one of the main contributing factors.
The Office for National Statitics said there were small increases in food and electricity prices, but they were offset by falls in petrol and air fares, partly thanks to Easter falling in April this year.
Housing prices also grew slightly more slowly thanks to a fall in the number of property sales in London.
The steady rise in inflation since the Brexit vote may reflect higher costs for producers since the fall in the value of sterling, but is also a reaction to more than three years of low inflation.
Between October 2013 and January of this year the CPIH rate did not rise above 2%, and there were concerns in late 2015 that the UK could be heading towards deflation.
The head of the TUC, Frances O’Grady, said the figures were a concern for workers struggling to make ends meet.
“The election showed that working people are struggling. And the biggest price rises in four years won’t provide any comfort,” she said.
“Working people are still £20 a week off worse, on average, than they were before the crash – and now rising prices are hammering their pay packets again.”
TUC analysis of OECD forecasts suggests the UK faces an average real-terms wage fall of 0.5% by the end of 2018, with only Greece, Italy and Austria performing worse among advanced economies.