Home » UK inflation hits a 40-year high of 9.0% as households suffer
News

UK inflation hits a 40-year high of 9.0% as households suffer


Links to breadcrumbs

PMN Business

Author of the article:

Reuters

Andy Bruce and William Schomberg

Publication date:

May 18, 2022 • 18 minutes ago • 3 minutes read • Join the conversation

Article content

LONDON – UK inflation last month soared to its highest annual level since 1982, putting pressure on Chancellor of the Exchequer Rishi Sunak to ramp up his aid to households facing a worsening cost of living crisis.

Consumer price inflation reached 9% in April, the Office for National Statistics said Wednesday, surpassing the recession peaks of the early 1990s that many Britons remember because of sky-high interest rates and widespread mortgage defaults.

Reuters’ poll of economists had indicated a reading of 9.1%.

Advertisement 2

This ad hasn’t loaded yet, but your article continues below.

Article content

Britain now has the highest inflation rate of Europe’s five largest economies and almost certainly the Group of Seven, with Canada and Japan not yet reporting April figures. Neither will match UK price growth.

“We cannot fully protect people from these global challenges, but provide significant support where we can and stand ready to take further action,” Sunak said.

Sterling fell after the data, falling 0.6% against the dollar at 0816 GMT.

Rising energy bills were the biggest driver of inflation, following the rise in regulated energy tariffs last month. As a result of the Russian invasion of Ukraine, those bills are likely to rise again in October.

Advertisement 3

This ad hasn’t loaded yet, but your article continues below.

Article content

According to UK budget forecasters, households are facing their biggest cost of living since record-breaking in the 1950s, and consumer confidence has plunged to an all-time low.

Poverty-reduction advocates called on Sunak to intervene now, starting with an immediate increase in the value of social benefits to match inflation.

“As the price of basic necessities such as food and energy continues to rise, the chancellor’s (treasury’s) inaction will make an already desperate situation worse for many,” Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, who campaigns on behalf of lower-income households, he said.

A study published Tuesday found that two in three people in Britain kept the heating off when they would normally have it on, nearly half drove less or changed supermarkets and just over a quarter said they skip meals. .

Advertisement 4

This ad hasn’t loaded yet, but your article continues below.

Article content

Food prices rose nearly 7% in the 12 months to April, the ONS said.

On Monday, Bank of England Governor Andrew Bailey said in a talk with lawmakers that food price increases were a major concern, while apologizing for “being apocalyptic for a moment”.

While the government has said it now has a £22 billion ($27.4 billion) package of household support, much of this is being offset by the effect of recent tax hikes on workers.

An increase in the prices charged by restaurants and cafes as VAT rates returned to their pre-pandemic levels in April also contributed to last month’s rise in inflation.

WORSE TO COME

The BoE forecast this month that inflation would exceed 10% later this year, and investors expect it to rise to the four rate hikes it has implemented since December that have pushed bank interest rates to 1%, the highest since 2009.

Advertisement 5

This ad hasn’t loaded yet, but your article continues below.

Article content

“Things will get worse before they get better,” said Paul Dales, the UK’s chief economist at the consultancy Capital Economics of Wednesday’s data.

Retail price inflation — an older measure that the ONS says is now imprecise, but widely used in commercial contracts and to determine interest payments on inflation-linked government bonds — rose to 11.1% last month, also the highest since 1982.

There were signs of further inflationary pressures ahead as manufacturers experienced the largest-ever rise in the prices they pay for their commodities, rising 18.6% annually, matching the record set in March.

Factories increased their prices by 14.0% in the 12 months to April, the biggest jump since July 2008.

(edited by John Stonestreet)

Share this article in your social network

Advertisement

This ad hasn’t loaded yet, but your article continues below.

By clicking the sign up button, you agree to receive the above newsletter from Postmedia Network Inc. receive. You can unsubscribe at any time by clicking the unsubscribe link at the bottom of our emails. Postmedia Network Inc. † 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Comments

Postmedia is committed to maintaining a lively yet civilized discussion forum and encourages all readers to share their thoughts on our articles. It can take up to an hour for comments to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We’ve enabled email notifications – you’ll now receive an email when you get a reply to your comment, there’s an update to a comment thread you’re following, or a user follows comments. Visit our Community Guidelines for more information and details about customizing your email settings.

This post UK inflation hits a 40-year high of 9.0% as households suffer

was original published at “https://financialpost.com/pmn/business-pmn/uk-inflation-hits-40-year-high-of-9-0-as-households-suffer”

About the author

admin

Add Comment

Click here to post a comment

Your email address will not be published.