Cost of living

Union blames ‘profiteering’ as inflation hits 9.1%

Petrol price
Soaring petrol prices are adding to business and household costs

UK inflation rose to 9.1% in May, the highest rate in 40 years, as a trade union blamed ‘profiteering’ by big companies.

Stronger food price inflation was the main cause behind the slight increase on April’s rate, while petrol prices also rose sharply, reflecting a sharp increase in oil refinery margins.

Stock market traders reacted negatively with the FTSE 100 falling by more than 100 points in early trade as investors expect the Bank of England to take an aggressive policy on interest rate rises.

The Bank has warned that inflation is on track to reach 11% later this year amid soaring gas and electricity prices.

Ian Stewart, chief economist at Deloitte, expects base rates to more than double in the next six months.

“The Bank of England is presiding over what seems likely to be the sharpest tightening of monetary policy since the 1980s,” he said. “It is touch and go as to whether the Bank will be able to curb inflation without triggering a recession.”

Chancellor of the Exchequer, Rishi Sunak said:  “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households. 

“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.”

But Rachel Reeves, Labour’s Shadow Chancellor of the Exchequer, was unforgiving. She said: “Over the last decade, Tory mismanagement of our economy has meant living standards and real wages have failed to grow.

“We need more than sticking plasters to get us back on course – we need a stronger, and more secure economy.”

Unite general secretary Sharon Graham said that corporate profits are fuelling the rise, not workers’ wages.

As millions of workers threaten a summer of discontent, Ms Graham said: “It’s not hard-pressed workers who are driving inflation, it’s whole swathes of corporate Britain who have lined their pockets. Runaway profits are driving the inflation that is threatening a national pay cut and yet the vast majority of politicians remain silent.

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“While the Governor of the Bank of England and the Prime Minister want workers to think it’s irresponsible to demand that their wages keep pace with prices, they won’t lift a finger to do anything about the ridiculous wealth being amassed by the rich and powerful.

“The truth is that corporate profiteering is out of control. CEOs are hiking prices while shareholders rub their hands and workers struggle to make ends meet.

“Unite makes absolutely no apologies for demanding that employers that can pay, do pay. Wage restraint, absolutely not. It’s time for profit restraint.”

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