The Consumer Price Index (CPI) hit 9.1% in the 12 months to May as the country hits a 40-year high for inflation.
Inflation is now at the highest level seen since March 1982 and almost five times higher than the Bank of England’s target of 2%.
And with the cost of living crisis continuing to impact families across the UK it now looks certain that inflation will exceed 10% in the coming months.
Annual inflation was last in double digits in February 1982, when it was at 10.2%. Inflation is expected to reach 11% by October according to Bank of England estimates.
The Office for National Statistics (ONS) said rising prices for food and non-alcoholic drinks, compared with falls a year ago, pushed up the inflation rate.
Simon Webb, managing director of capital markets and finance at LiveMore, said: “Inflation has risen yet again and expected to move to 11% in October when the next energy price cap is set.
“The Bank of England is under pressure to tighten monetary policy even further and inevitably lift the base rate throughout the rest of this year and potentially into 2023.
“But homeowners can beat inflation by taking out a long-term fixed rate mortgage keeping their payments the same each month while the cost of living goes up.
“I’m not just talking about five-year fixed rates but fixing for 10 or 20 years or even fixing for the whole life of the mortgage. In a rising interest rate environment, it makes perfect sense to fix.”
Kay Westgarth, head of sales at Standard Life Home Finance, added: “Today’s figures confirm that the steady increase in housing costs that we have seen since the start of the year has not slowed down, leaving many first-time buyers wary or unable to take their first steps onto the housing ladder.
“While the Bank of Mum and Dad continues to play a role in helping people to take this leap, its ‘lending potential’ has also been hit by the rising cost of living as those on fixed incomes increasingly need to budget carefully.
“That said, recent figures from the later life lending market has shown that advisers and their clients are increasingly looking beyond just their savings, or potentially cashing in investments early, to help their loved ones onto the property ladder.
“Equity release is becoming an increasingly popular mechanism to support intergenerational fairness within families and help the younger generation benefit from the very house price increases that have been holding them back.”
