The G7 country with the greatest inflation is the United Kingdom
British consumer price inflation hit a 40-year high of 9.1 percent last month, the highest rate among the Group of Seven nations and highlighting the severity of the cost-of-living crisis. Soaring food prices were a major factor in this increase.
The reading, which increased from 9 percent in April, was in line with the majority of analysts surveyed by Reuters. May’s inflation was the biggest since March 1982, according to historical data from the Office for National Statistics, and it’s expected to become worse.
One of the poorest performing currencies this year versus the US dollar has been sterling, which dropped to below $1.22 and lost 0.6 percent on the day.
Due to its high energy import cost, some investors believe that Britain faces a risk of both chronically high inflation and a recession. and ongoing Brexit issues, which could harm economic relations with the European Union even more.
“With the economic outlook so uncertain, no one knows how high inflation could go or how long it will last,” said Jack Leslie, senior economist at the Resolution Foundation think tank. “This makes fiscal and monetary policy judgments particularly tough.”
The Resolution Foundation stated earlier on Wednesday that Brexit, which had made Britain a more closed economy, had compounded the cost-of-living damage for households and had negative long-term implications for productivity and wages.
In May, Britain had a higher headline inflation rate than the US, France, Germany, and Italy. Although Japan and Canada have not yet provided data on consumer prices for May, neither is probably going to come close.
Prior to reaching a peak of just above 11 percent in October, when regulated household energy rates are scheduled to climb once more, the Bank of England predicted last week that inflation will likely remain above 9 percent during the upcoming months.
Finance Minister Rishi Sunak stated after the statistics that the British government was making every effort to stem an increase in costs.
Food and non-alcoholic beverage prices increased by 8.7% annually in May, which was the highest increase since March 2009 and made this sector the main contributor to annual inflation in that month.
The ONS reported that overall consumer prices increased by 0.7 percent in monthly terms in May, slightly more than the 0.6 percent estimate.
British factory-gate pricing, a major element in the prices that customers ultimately pay the highest increase since these records began in 1985, was 22.1 percent higher in May than a year earlier, according to the ONS.