As the cost of food continues to rise, chocolate prices in the UK increased at the quickest rate ever recorded in May, according to official figures.

In the year ending in May, the primary rate of inflation stayed at 3.4 percent, which was the highest level in almost a year.

However, several analysts conjectured that companies were passing on recent hikes in employer National Insurance payments to customers, which led to food prices rising for the third consecutive month.

After Chancellor Rachel Reeves announced the increases in last October's Budget, which raised 25 billion pounds, the hike and a higher minimum wage went into effect in April.

With a 4.4 percent increase in May, food prices have increased for three consecutive months and are at their highest level since February of last year.

The increase "perhaps provides a tentative sign that firms are passing on more of April's rise in National Insurance Contributions in their selling prices," according to Ruth Gregory, deputy chief economist at Capital Economics.

 

After an Office for National Statistics (ONS) correction, the overall rate of price increases in May was the same as in April.

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When the Bank of England meets, it is not anticipated to lower interest rates from 4.25 percent even if inflation is higher than its target rate of two percent.

According to ONS data, chocolate prices increased 17.7 percent in the year ending May, which is the biggest increase since the start of the records in 2016. Harvests have been hampered by unfavorable weather in cocoa-producing nations like Ghana and Ivory Coast.

It is generally anticipated that future inflation rates would decline in 2025 as long as the BoE maintains its strict control over rising interest rates.

However, given the current state of affairs with Iran and Israel, that course may now be called into question. With Iran, which exports more than 1.5 million barrels per day, owning a vital shipping channel that they could cut off in the case of a full-scale battle, missiles fired into Tehran raised concerns about potential escalation.

After spending the majority of the previous two months in the low 60s, the price of Brent Crude Oil has already increased by 12 percent in the last week and momentarily surpassed $77 before dropping down.

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Interest rates are the second element affected by this inflation report, and the BoE's MPC is scheduled to convene to make its most recent decision.

The MPC is generally likely to maintain the base rate at 4.25 percent, ahead of additional possible reduction later in 2025, despite the fact that unemployment has increased and wage growth has slowed. This is due to last month's inflation increase as well as these recent geopolitical developments.