UK Inflation Marginally Increased to 9.1 per cent in May, Predominately Due to Surging Food Prices

Main points

• Headline consumer price inflation increased to 9.1 per cent in May 2022 from 9.0 per cent in April. Our measure of underlying inflation which excludes 5 per cent of the highest and lowest price changes, remained at 5.7 per cent in May.
• Between April and May, food and non-alcoholic beverages contributed 0.22 percentage points to the change in the headline figure.
• Our analysis suggests that in May, 30 per cent of goods and services prices changed with almost 18,400 items recording price increases, while 3.6 per cent of prices were reduced due to sales and 4.4 per cent fell for other reasons.
• Underlying inflation increased in 9 of the 12 UK regions in May. Underlying inflation in the West Midlands was the highest at 6.5 per cent, compared to the South East of England which had the lowest rate at 5.2 per cent in May.
• NIESR forecasts consumer price inflation to rise to double-digits towards the end of the year, particularly because of the hike in the energy price cap, and remain above target through 2023.
• Despite the Chancellors additional support to households announced recently, NIESR still estimates approximately 1.2 million households are facing food and energy bills higher than their income.
• The Monetary Policy Committee continues to walk on thin ice with heightened risks of deepening the recession NIESR forecasts at the end of 2022, if rates are hiked too rigorously.

“Annual headline CPI inflation marginally increased to 9.1 per cent in May from 9.0 per cent in April. Meanwhile, our measure of underlying inflation, which excludes extreme price movements remained at 5.7 per cent in May. UK inflation is now being driven predominately by surging food prices instead of higher energy prices, with food and non-alcoholic beverages adding some 0.2 percentage points to the headline figure in May. NIESR forecasts annual consumer price inflation will rise to double-digits towards the end of 2022, particularly because of the hike in the energy price cap in October 2022 and remain above target through 2023. Despite the Chancellors additional support to households announced recently, NIESR still estimates approximately 1.2 million households will face food and energy bills higher than their incomes. Persistently high inflation and a forecasted shallow recession at the end of 2022 means The Monetary Policy Committee continue to walk on thin ice, with heightened risks of deepening the recession if rates are hiked rigorously.”

Urvish Patel
Associate Economist, Macroeconomic Modelling and Forecasting

See our previous CPI tracker to follow the analysis