By Max Clarke
The consumer prices index of inflation has remained unchanged this month from the 4.5% figure revealed by the Office for National Statistics last April, despite widely fluctuating prices of key goods and services.
Alcohol and tobacco were amongst the highest upwards pressures on CPI inflation, and prices for food continue to add to the 2 year inflation high.
Downwards pressures came from falling air fares and certain non food items. Mortgage prices also eased off, prompting commentators to note that inflation is affecting essential items more than luxury goods, disproportionately affecting those on lower incomes than the better off.
“The Government is failing to get a grip on the economy. Inflation is still too high and it is the low paid, the jobless and the vulnerable who are bearing the brunt," said unison chief, Dave Prentis.
“Core inflation (minus food and energy) fell to 3.3% from 3.7% in April,” commented the Chief Economist as World First currency exchange, Jeremy Cook, “maintaining the stance that the big move higher in prices has been as a result of commodity price moves as opposed to wages.”
Despite the high inflation- far exceeding the Bank of England’s 2% target- interest rates are unlikely to be raised in the coming months in a bid by the Bank’s Monetary Policy Committee to foster growth.
Continued Cook: “This further galvanizes the view that interest rates are not going rise anytime soon as the MPC will hold on to the belief that these rises will moderate in the coming months.”
The high inflation, which has seen food prices spike by 9%, continues to add pressure to UK households’ disposable income, which have fallen in real terms by up to £1000 since pre recession levels.
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