UK inflation falls as economy shrinks in May

    Simpson Wood
    11th August 2023
    Home » Blog Posts » UK inflation falls as economy shrinks in May

    The UK’s rate of inflation fell to 7.9% in the year to June while the country’s economy shrank in May, according to the latest Consumer Prices Index (CPI) published by the Office for National Statistics (ONS).

    The inflation rate is currently at its lowest annual rate since March 2022, the ONS said.

    Price rises have slowed by more than experts anticipated. According to the ONS, falling fuel prices helped the rate of inflation to drop, and food prices rose less quickly when compared to June 2022.

    Core inflation also fell from 7.1% to 6.9%, the data showed.

    Meanwhile, the UK economy contracted by 0.1% in May following growth of 0.2% in April, ONS data showed.

    The rising cost of living and higher interest rates have been squeezing households and businesses, the ONS said.

    It said the manufacturing, energy and construction sectors fell in May, along with sales at pubs and bars.

    David Bharier, Head of Research at the British Chambers of Commerce (BCC), said the figures provide ‘further evidence of the precarious state of the UK economy’.

    He added:

    ‘While businesses have been incredibly resilient in stomaching multiple waves of economic crises, our latest Quarterly Economic Survey shows that most firms are still not reporting improved business conditions.

    ‘Positively, slightly fewer businesses report inflationary pressures, but interest rates have grown as a concern for businesses. We are starting to see more businesses report rising borrowing costs, but we are yet to understand the full impact of rising interest rates.

    ‘Businesses are operating in a climate with a high degree of uncertainty, and government and Bank of England policy both need to be very responsive to developments.’

    Internet links: ONS June inflation data ONS May GDP data BCC website

    Need Some Advice?

    Looking for some help or a little advice?

    Call today on 01484 534431 or fill in our enquiry form below, and we’ll call you back.

    Autumn Statement Summary 2023

    The Chancellor, Jeremy Hunt, delivered his Autumn Statement on Wednesday 22 November. Our summary boils his 110 different proposals down to a concise report of the key points. The Autumn…

    Latest guidance for employers

    HMRC has published the latest issue of the Employer Bulletin. The October issue has information on various topics, including: Please contact us for help with tax matters. Internet link: Employer Bulletin

    Hybrid and remote working here to stay

    A large majority of UK business leaders plan to offer employees remote and hybrid working in the long-term, according to the Institute of Directors (IoD). A survey conducted by the IoD…

    Many firms still facing recruitment problems

    Many UK firms are still facing hiring issues as a result of challenging economic conditions, according to a report from the British Chambers of Commerce (BCC). 73% of firms surveyed by…

    Inflation rate holds steady as UK economy grows

    The UK’s rate of inflation held steady in September while the nation’s economy grew the month before, according to the latest figures from the Office of National Statistics (ONS). The…