UK prices at 4-year high

British inflation unexpectedly jumped to its highest level in nearly four years in May, tightening the squeeze on UK consumers, who face the added worry of political uncertainty after last week’s inconclusive election.

The impact of the fall in the pound since last year’s Brexit vote made itself felt as the higher costs of foreign holidays and of imported computer games and equipment helped push up consumer prices by 2.9% year-on-year. That was its biggest annual increase since June 2013, the UK’s Office for National Statistics (ONS) said, and was above the median forecast of 2.7% in a Reuters poll of economists.

It is also faster than the growth in pay for most people, who have suffered a squeeze on their incomes almost without break for a decade. Data due to be released later today is likely to show basic UK pay rose by an annual 2% in the three months to April. Prime minister Theresa May, weakened by the loss of her parliamentary majority in the election, has accepted voters’ patience with austerity is at an end.