The UK’s headline rate of inflation increased again during May to reach a rate of 9.1 per cent, according to official figures from the Office for National Statistics (ONS).
Prices have been rising sharply for several months across the country, with the rate for May representing an inflation level not seen in some 40 years.
The ONS has cited price rises on food and non-alcoholic beverages as being the primary drivers of inflation in May, with more and more households struggling to make ends meet as a consequence.
For businesses too the strikingly high rates of inflation represent a huge challenge from a cashflow and financial management perspective.
Notably, the corporate insolvency experts of Begbies Traynor recently reported that inflationary pressures are now the foremost concern for British businesses, for the first time in a decade.
“This could mean that companies which have just been surviving, being kept alive only by government support, finally succumb to the inevitable,” commented Ric Traynor, the company’s executive chairman.
Responding to the ONS’ latest inflation figures, chancellor Rishi Sunak said: “We are using all the tools at our disposal to bring inflation down and combat rising prices.
“We can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth.”
For its part, the British Chambers of Commerce (BCC) has called on government policymakers to help companies cope with their current financial pressures by cutting VAT on business energy bills to 5 per cent.
“This inflationary surge sits alongside a poor economic outlook and unless the government acts with urgency to encourage businesses to invest, the chances of a recession will only increase,” said the BCC’s head of research David Bharier.
Anna Leach, deputy chief economist at the Confederation of British Industry (CBI), has warned that she expects to see inflation rates remaining “elevated” throughout 2022.
“The result will be much pain forthose businesses most exposed to higher costs, and a historic squeeze on households’ incomes,” she said.
“The void left by falling household spending must be filled by government action to shore up both near and long-term economic growth,” she added.