Prices in the UK are continuing to rise at their fastest rate for 40 years due to climbing food, energy and fuel costs.
The Office for National Statistics (ONS) said UK inflation, which is the rate at which prices rise, edged up to 9.1% in the 12 months to May 2022, from 9% in April 2022. Higher food prices, particularly for bread, cereal and meat, helped drive the latest rise in the cost of living.
It has led to workers and unions pushing for pay rises to help them cope with soaring prices. But the government warned against employers handing out big increases in salaries over fears of a 1970s-style “inflationary spiral”, where prices continued to rise as wages went up. Currently, inflation is at the highest level since March 1982, when it also stood at 9.1% and the Bank of England has warned of it reaching 11% this year.
The Breakdown of Inflation
Inflation is the pace at which prices are rising. For example, if a bottle of milk costs £1 and that rises by 5p compared with a year earlier, then milk inflation is 5%.
Following a BBC-commissioned survey of more than 4,000 people, 82% said they thought their wages should increase to match the rising price of goods and services. Households were hit by an unprecedented £700-a-year increase in energy costs in April 2022, and fuel price rises in June 2022 signalled that it costs more than £100 to fill an average family car with petrol.
Rail workers walked out on Tuesday, June 21, 2022, causing severe disruption, with further strikes planned for Thursday, June 23, 2022, and Saturday, June 25, 2022, in a dispute over pay, jobs and conditions.
The Call of Unions
The Rail, Maritime and Transport (RMT) union is calling for a pay rise of 7%, while employers offered a maximum of 3%.
Unison, which represents public sector workers, accused ministers of “living on another planet” over “talks of public sector pay restraint”. It pointed out that “Under-pressure health, care, school and council services desperately need staff to be given a pay boost that matches runaway prices”.
The biggest teachers’ union is also warning of potential industrial action over pay. The National Education Union (NEU) criticized government proposals for a 3% pay increase for most teachers in England, and called for an “inflation-plus increase for all teachers”.
But Dominic Raab, who is the Deputy Prime Minister of UK disclosed to the media that “We have got to stop making the problem worse by fuelling pay demands that will only see inflation stay higher for longer and that only hurts the poorest the worst”.
Adjusting to the new Norm
The ONS said rising prices for food and non-alcoholic beverages helped fuel inflation in May 2022. Also, Russia’s war in Ukraine severely restricted wheat and maize supplies, which are used to make bread and cereals, from two of the world’s biggest exporters.
Ukraine is also a major producer of sunflower oil, which indirectly means the costs of alternatives have also climbed. A forecast by market reach firm Kantar revealed that the average annual grocery bill in the UK is set to rise by £380 this year (2022). Supermarket Asda told reporters that some shoppers are setting £30 limits at checkouts and petrol pumps, with customers putting less in their baskets and switching to budget ranges.
