Rise in interest rates expected following stubborn inflation figures
The Bank of England is expected to again raise interest rates after it was revealed that inflation remained unchanged between April and May.
Figures from the Office for National Statistics revealed that prices rose by 8.7% in the 12 months to May 2023, unchanged from April. On a monthly basis, consumer price inflation increased by 0.7% in May.
Rises in the price of air travel, recreational and cultural goods and services, and second-hand cars were the largest contributors to the increase in inflation.
Food and non-alcoholic beverage inflation was still very high in May, at 18.3%, although this figure was down from 19% in April. The price inflation of all goods was down from 10% in April to 9.7% in May, however the figure for the price of services rose from 6% to 6.3%.
The Bank of England was expected to raise interest rates by a quarter of a percent to 4.75%, although it is now being suggested that this number may reach 5%.
During Prime Minister’s Questions on Wednesday, the leader of the Labour Party Sir Keir Starmer blamed the “mortgage catastrophe” on the Government, while his opponent Prime Minister Rishi Sunak pointed to wider macroeconomic factors as the cause.