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The rate of price rises has remained at 8.7% despite expectations of a fall, according to official figures.

The Office for National Statistics (ONS) announced the consumer price index measure of inflation stood at 8.7% in the year up to May, the same as the rate in April.

A slight decrease, to 8.4%, had been expected by economists. It puts the government’s pledge to halve inflation this year in doubt.

The rate has been kept high due to the rising cost of second-hand cars, live music events and computer games, the ONS chief economist said, though they were partially offset by the fall in petrol prices. More expensive flights were also partially to blame, the ONS said.

As a result, interest rate projections have increased and the base rate is expected by investors to peak at 6% in March next year but could reach the new high as soon as December.

Investors now expect the Bank will maintain that high well in to next summer.

High interest rates mean more expensive borrowing with more costly mortgage bills likely.

The pain will come before rates reach the high as lenders price in the projections in to the products they have on the market. The interest rate on the average two-year fixed mortgage already reached 6.01% earlier this week.

Chancellor Jeremy Hunt said the government will make no policy changes in response to the news.

“Today’s figures strengthen the case for the government to stick to its guns, no matter what the pressure from left, right or centre, we won’t be pushed off course,” he said.

“We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living.”

Inflation rate rises are turning into a sticky phenomenon – and there are a few obvious consequences


Ed Conway - Economics editor

Ed Conway

Economics & data editor

@EdConwaySky

Not good.

Not good at all.

The last few months of inflation data have had a dreary and repetitive rhythm to them.

Economists predict the rate at which prices are rising will finally begin to fall, and fast. Then the official data comes in and it turns out prices are not falling as fast as predicted. And then everyone gets depressed.

That pattern repeated itself today.

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“If you look at what’s happening in other countries, you can see that rises in interest rates do bring down inflation over time, that will happen here,” Hunt added.

There’s been an increase in another measure of inflation being watched by the Bank of England – core inflation, which excludes volatile categories including fuel and food.

That rise bucked expectations and now stands at 7.1%, a 31-year high and up from 6.8% last month. Not since March 1992 was the rate of core inflation so high.

It was forecast to remain stagnant at 6.8%.

Food inflation came down slightly to 18.3% from 19.1% last month, the ONS said.

The Bank of England has undertaken a programme of interest rate rises to bring inflation down to 2% and Wednesday’s figure will be closely watched by rate-setters ahead of the latest expected rise on Thursday.

Inflation began to increase in late 2021, when supply chain problems linked to COVID lockdowns and the associated worker shortages meant demand for goods could not be met.

Russia’s invasion of Ukraine exacerbated the problem as many countries, particularly those in Europe, scrambled to find other energy sources and reduce their use of Russian gas, which subsequently pushed up the cost of energy and many other goods.

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Sainsbury’s blames Visa card issues for online payment failure

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Sainsbury's blames Visa card issues for online payment failure

J Sainsbury, the supermarket chain, was on Wednesday racing to resolve an issue with card payments made involving Visa and Barclays which was impacting customers’ ability to pay for online grocery orders.

Sky News understands that Sainsbury’s is working with Visa and Barclays to address the issue after a number of shoppers reported that their card payments had failed.

A Sainsbury’s spokeswoman initially said Visa card payments were to blame for the problems, with the retailer subsequently updating its position to say the technical issue actually rested with Barclays.

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The grocer ruled out the possibility of a cyberattack and said its website and app were functioning normally, with no direct impact on customers.

The issue nevertheless illustrates the extent to which the industry is on high alert for cybersecurity-related incidents after a spate of attacks which have raised concerns about the sector’s resilience.

In recent months, major British retailers including Marks & Spencer, the Co-op and Harrods have been the victim of cyberattacks, with the impact on M&S particularly acute.

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M&S has said the attack on its systems would cost it at least £300m and forced it to suspend online orders for months.

The Co-op saw in-store availability of thousands of products disrupted for several weeks.

A Sainsbury’s spokesperson said, “We’re working with one of our payment providers to resolve a temporary issue processing some payments for our Groceries Online service.

“We continue to deliver orders for customers and our website and app are working as normal.”

Visa said: “”Visa systems are operating normally. We are working with our partners to help them investigate.”

Barclays has been contacted for comment.

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Gary Neville hits out at national insurance rise – and makes prediction for Manchester United’s season

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Gary Neville hits out at national insurance rise - and makes prediction for Manchester United's season

Gary Neville has criticised the government’s national insurance (NI) rise this year, saying it could deter companies from employing people and “probably could have been held back”.

The former Manchester United and England footballer-turned business owner, who vocally supported Labour at the last election, employs hundreds of people.

But he expressed his frustration at the recent hike on employers’ NI, which has significantly increased the taxes businesses have to pay for their employees.

Speaking to Sky News’ Business Live, Neville said: “I honestly don’t believe that, to be fair, companies and small businesses should be deterred from employing people. So, I think the national insurance rise was one that I feel probably could have been held back, particularly in terms of the way in which the economy was.”

While the Sky Sports pundit thought the minimum wage increase introduced at the same time was necessary to ensure that people are paid a fair wage and looked after, he made it clear the double whammy for businesses at the start of April would be a challenge for many companies big and small.

“I mean look it’s been a tough economy now for a good few years and I did think that once there was a change of government, and once there was some stability, that we would get something settling,” he said. “But it’s not settling locally in our country, but it is not settling actually, to be fair, in many places in the world either.

“I don’t think we can ever criticise the government for increasing the minimum wage. I honestly believe that people, to be fair, should be paid more so I don’t think that’s something that you can be critical of. I do think that the national insurance rise, though, was a challenge.”

Read more:
The industries hit hardest by national insurance hike
Survival guide: How to offset national insurance contributions hike

Neville’s business interests are diverse, spanning property development, hospitality, media, and sports.

He co-founded GG Hospitality, which owns Hotel Football and the Stock Exchange Hotel, and is involved in Relentless Developments, focusing on building projects in the North West. He is also a co-founder of Buzz 16, a production company, and a partner in The Consello Group, a financial services company.

The tax increase is expected to raise £25bn for the Treasury, with employers having to pay NI at 15% on salaries above £5,000, and up to 13.8% on salaries above £9,100.

The rise has already led the Bank of England to warn that it is contributing to a job market slowdown.

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NI and tariffs pile pressure on firms

Governor Andrew Bailey warned last month that “the labour market has been very tight in the past few years, but we are now seeing signs that conditions are easing, employment growth is subdued, and several indicators of labour demand and hiring intentions have softened”.

The government has defended the tax increase, announced by Rachel Reeves in last year’s budget and implemented in April, arguing that the money was needed to pay for public services like the NHS to help bring down waiting lists.

‘Can’t get any worse’ for Man Utd

Neville conceded that turning beleaguered football club Manchester United around could prove more difficult than trying to bring about substantial economic growth.

The side finished 15th last season – its worst performance in the history of the Premier League.

“Yeah, that could be a bigger challenge than the economy… I think the two signings are good signings yet, there’s a couple more needed,” Neville said of his former club’s fortunes.

“I think they need a goalkeeper. And I think if they fill those two positions with decent signings, then United can have a lot, I mean, they have to have a better season than last year. It can’t get any worse, really.”

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English cricket goes into bat with bulk of £520m Hundred windfall

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English cricket goes into bat with bulk of £520m Hundred windfall

English cricket’s governing body will on Wednesday hail a landmark moment for the sport when it announces that three-quarters of the deals to bring in new investors to The Hundred have been completed.

Sky News understands that the England and Wales Cricket Board (ECB) plans to issue a statement confirming that it has received proceeds from the sale of stakes in Birmingham Phoenix, London Spirit, Manchester Originals, Northern Superchargers, Southern Brave and Welsh Fire.

The two other franchise deals – involving the Oval Invincibles and Nottinghamshire’s Trent Rockets – will be completed on October 1, the ECB is expected to say.

One insider said a statement was likely to be issued on Wednesday, although they cautioned that the timing could slip.

When all eight deals are concluded, they will generate a collective windfall of £520m for the sport’s strained coffers.

Last week, Sky News revealed that unresolved talks between India’s richest family and Surrey County Cricket Club – which hosts the Oval Invincibles Hundred team – were threatening to delay the delivery of a vast windfall for the sport.

One of the outstanding issues relates to the name under which the Oval Invincibles will play in future years, with the Ambani family keen to use a derivative of the Mumbai Indians brand that it also owns.

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This week’s announcement will come after months of talks after the ECB and the eight Hundred-playing counties agreed exclusivity periods with their preferred investors.

The backers include some of the world’s most prominent financiers, billionaires and technology executives.

Following protracted talks, the ECB has agreed to revised terms with the investors, with host venues now retaining control of their teams’ intellectual property rights.

The investors will also hold an effective veto over future expansion of the Hundred, while the ECB will be barred from launching any other short-form professional version of the sport while the Hundred remains operational.

Meanwhile, the governing body will retain full ownership of the competition itself as well as controlling the regulation of it and the window within which it can be played each year.

The ECB has been waiting for investors in the eight franchises to sign participation agreements since an auction in February, which valued the participating teams at just over £975m.

Some of the deals involve the investors owning 49% of their respective franchise, while India’s Sun TV Network has taken full ownership of Yorkshire’s Northern Superchargers.

The proceeds of its stake sales will be distributed to all of English cricket’s professional counties as well as £50m being delivered to the grassroots game.

The windfalls are being seen as a lifeline for many cash-strapped counties which have been struggling under significant debt piles for many years.

The most valuable Hundred sale saw a group of technology tycoons, including executives from Google and Microsoft, paying about £145m for a 49% stake in Lord’s-based London Spirit.

This year’s tournament kicks off next week with fixtures including a clash between the two London-based franchises.

The ECB declined to comment.

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