Record Air Fare Rises Push Inflation Higher

Written By Unknown on Selasa, 18 Juni 2013 | 18.56

The annual rate of inflation was driven higher than expected in May as air fares rose by record levels, according to the Office for National Statistics (ONS).

The rebound in the CPI measure of inflation to 2.7% - which followed a surprise dip to 2.4% in April - was also blamed on fuel prices increasing but the ONS said the biggest contributing factor was a 22% jump in airline ticket costs between April and May.

The ONS said that prices rose across European, long-haul and domestic flights though higher air fares were not necessarily linked to the early timing of the Easter holidays.

Overall transport prices rose by 0.4% between April and May.

The price of clothing and footwear also rose 1.2% month on month to tighten the squeeze on households, as the cost of women's outdoor clothing increased during a colder-than-normal month.

But food and drink prices helped hold back inflation, with price falls for meat, vegetables, fruit, sugar, sweets and jams.

Stubbornly high inflation is expected to peak around 3% over the next few months ensuring a summer of pain for consumers, though the Bank of England has forecast it will fall back towards its 2% target more quickly than originally expected.

Rising energy bills coupled with high fuel and tuition fees have been among the inflationary pressures facing households in recent years at a time of below-inflation pay rises.

The resulting squeeze in spending has been among the factors holding the UK economy back from stronger growth.

The Treasury gave its reaction to the inflation number by pointing to the fact that the CPI measure was down by almost a half from its peak of 5.2% in 2011.

A spokeswoman said: "To help families with the cost of living, the Government has increased the tax-free personal allowance to £10,000, which will take 2.7 million people out of income tax altogether and save a typical taxpayer over £700.

"(It has) frozen fuel duty which has kept petrol prices 13p per litre lower than they would otherwise have been."

But TUC general secretary Frances O'Grady said Britain was set for a "joyless" recovery.

She said: "Britain's great wage squeeze shows no sign of abating. Forty consecutive months of real wage falls means people have less to spend on the high street, and are why economic green shoots are not being felt across the country."


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