Inflation misery set to intensify with push into double-digit territory

The cost-of-living squeeze could tighten this week if new figures show the annual rate of inflation tipping into double-digit territory.

Wednesday should see the publication of the latest monthly data from the Office for National Statistics.

Last month’s figures showed that the rate of Consumer Prices Index inflation had surged to 9 per cent in April from 7 per cent in March. This week’s data for May is likely to reveal a further hike amid rising food costs, higher energy bills and sky-high prices at the pumps.

The Bank of England has already warned that consumer inflation will spike to an annual rate of more than 11 per cent by the end of this summer and some estimates are putting food inflation as high as 15 per cent.

Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “Attention will be trained closely on the latest temperature check on the UK economy with key inflation data for May out on Wednesday. The Consumer Prices Index was already running at the red hot rate of 9 per cent in April and is expected to top 10 per cent this year, so investors are anxious to find out how soon it’ll get to double digits and whether there is any sign of an easing off in prices.

“Energy costs have been particularly hard to stomach for companies and consumers, but shoppers are also having to deal with eye-watering rises across the board from supermarket prices to the soaring cost of home repairs and improvements. There seems to be little immediate end in sight to the price spiral, despite efforts by the Bank of England to try and depress demand in the economy.”

Analysts at investment firm AJ Bell noted: “Central bankers, politicians, investors, economists and the British public will benchmark these inflation figures against the wage growth numbers of June 14. They will also perhaps add the unemployment rate released on the same day to the inflation rate to get an update of the so-called Misery Index, an indicator created by economist Arthur Okun.

“The latest Misery Index score, for April, stood at 10.7, the highest since January 2013.”