The cost of living in the UK rose in May to its highest level in over 40 years. UK inflation during that month was 9.1%, reports the UK Statistics Office. Inflation was already 9% in April, making consumer prices the biggest increase since 1982.
As in many other countries, fuel, electricity and food prices in the UK in particular have risen sharply in the past month. The situation is expected to get even worse.
The Bank of England thinks inflation will hit just over 11% this year, partly because of more expensive energy contracts that many Britons will have to contend with.
Britain’s central bank raised interest rates for the fifth consecutive time last week. The government says it “will continue to act vigorously to fight inflation”.
By raising interest rates, borrowing money becomes more expensive and less money is available. This should bring prices down. Higher interest rates fight inflation, but also slow economic growth.