December 3, 2022

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UK inflation jumps to 40-year high at 9% as food and energy prices soar

UK inflation jumps to 40-year high at 9% as food and energy prices soar

The UK’s Office for National Statistics said its estimates indicated that inflation could have been higher “sometime around 1982.”

Justin Thales | Afp | Getty Images

Official figures revealed on Wednesday that UK inflation jumped to a 40-year high of 9% in April as food and energy prices escalated, escalating the country’s cost-of-living crisis.

Consumer prices rose 2.5% month over month, slightly less than expectations for a 2.6% rise in a Reuters poll of economists, which also forecast a 9.1% annual increase.

The 9% rise in CPI is the highest since records began in its current form in 1989, surpassing the 8.4% annual rise recorded in March 1992 and much earlier. 7% was seen in March from this year. The UK’s Office for National Statistics also said its estimates indicated inflation could have been higher “sometime around 1982.”

From 1 April, the UK’s Energy Regulatory Authority raised the household energy price cap by 54% after wholesale energy prices rose, including a record rise in global gas prices. The regulator, Ofgem, has not ruled out further increases in the cap in its periodic reviews this year.

Bank of England pressure

The Bank of England It has raised interest rates in four consecutive meetings, taking the cost of borrowing from a historic pandemic-era low of 0.1% to a 13-year high of 1%, as it looks to rein in hyperinflation without hampering economic growth.

A recent survey shows that a quarter of Britons have skipped meals With inflationary pressures and the food crisis merging into what Andrew Bailey, Governor of the Bank of England, described as “appalling” expectations for consumers.

Wednesday’s hyperinflation delivers another “hammer blow” to families already worried about the cost of living, and there are warnings that the worst is yet to come.

“Unlike the US, inflation in the UK continues to rise at the moment, adding to concerns about the cost of living,” Richard Carter, head of fixed interest research at Quilter Cheviot, said in a research note.

“It will also add to pressure on the Bank of England to raise interest rates and control higher rates even if, as they themselves admit, many of the factors driving inflation are out of their control.”

Carter noted that pressure is likely to build on the British government to withdraw leverage and look to “relieving the pain for households in the fall”.

‘Unprecedented’ damage

The British Chambers of Commerce warned after an announcement on Wednesday that “appalling” inflation and the cost of living crisis facing families were hurting the ability of businesses to invest and operate at full capacity.

Suren Thiru, head of economics at BCC, said in a note.

“While inflation may moderate a bit during the summer, the April inflationary rally is likely to be surpassed in October as the expected month-to-month energy price ceiling hike pushes inflation above 10%.”

The BCC has called on the British government to help consumers and businesses through the crisis by reversing the recent increase in National Insurance – a tax on income – and reducing value-added tax (VAT) on commercial energy bills.

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