SCOTLAND’S Finance Secretary has warned the state of the UK’s economy is “extremely worrying” as inflation hit a new 40-year high.
The rate of consumer prices index (CPI) inflation rose from 9% in April to 9.1% in May, the Office for National Statistics (ONS) has announced.
The news comes as a further hammer blow to people across the UK struggling with the cost-of-living crisis.
Energy bills rose by 54% for the average household at the beginning of April and will remain at this level until October. But forecasts released this week predict that the Government cap on energy bills could rise again from an already record-high £1971 to £2980 in the autumn.
The Bank of England has predicted that inflation will spike at more than 11% in October after the price cap is changed again.
“It's an extremely worrying outlook,” Kate Forbes told Good Morning Scotland. “This is the highest level of inflation since 1982. But perhaps what's even more concerning is that the Bank of England are predicting that it will continue to rise, reaching double figures in the autumn.
She added: “And we also know that the inflation rate is essentially higher for the poorest households, because there's a greater component of their weekly bills that’s spent on food, on fuel, which is where we're seeing the highest price increases.”
The inflation increase was in large part driven by the increase in food prices, which added more than 0.2 percentage points to the inflation number, the ONS said.
Clothing and footwear prices helped keep a lid on inflation, while recreation and culture prices also pulled it downwards.
Forbes continued: “Everybody is contending with increases, but quite clearly those who are earning the least are facing the greatest challenges.”
The SNP minister pointed to measures in this year’s Scottish Budget to help ease the burden on struggling families, including uprating all social security benefits at the rate of inflation at the time of the budget in April. However, the rate of inflation has now soared by a further 3.1%.
The Finance Secretary pointed to a “myriad of support”, including the Scottish Child Payment and council tax reductions for pensioners.
She added: “But that doesn't take away from the fact that families … are struggling and ultimately, the UK Government, who I speak to on a constructive basis, hold most of the powers needed to tackle this – powers over energy, powers over the minimum wage, powers over social security spending.”
Chancellor Rishi Sunak insisted his government is doing all it can to alleviate pressure on those worst affected by the economic crisis.
He 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 £1200 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.”
Labour said the hardship of millions of people was not a new phenomenon under the Tory government.
Shadow chancellor Rachel Reeves commented: “Today’s rising inflation is another milestone for people watching wages, growth and living standards continue to plummet.
“Though rapid inflation is pushing family finances to the brink, the low wage spiral faced by many in Britain isn’t new.
“Over the last decade, Tory mismanagement of our economy has meant living standards and real wages have failed to grow.”
SNP Treasury spokesperson Alison Thewliss said: “Time and again the SNP has urged the Tories to take real action – but instead, they choose to make the rich richer and the poor poorer. This has to end.
“With Labour failing to take this UK Government to task, and refusing to consider re-joining our allies within the EU, it is clear that only independence can protect Scotland from ‘Brexit Britain’."
The Scottish Greens economy spokesperson, Maggie Chapman MSP, added: "With soaring food prices, and skyrocketing energy bills, Downing Street has overseen a cost of living crisis that is hammering families across the country."
"These shocking inflation figures show that the problem will only get worse. A lot of people are really struggling, but Boris Johnson and his colleagues don't care. They are more concerned about the wellbeing of their cronies and their donors."
"After years of failures and bad choices, it is clear that the Tories can't be trusted with the economy. It doesn't need to be like this. With independence we can do things differently and build a fairer and greener economy that works for people and the planet, rather than one that is based on a toxic mix of cuts, austerity and deregulation."
