The UK now has the highest inflation rate of Europe’s five biggest economies and almost certainly of the Group of Seven countries, with Canada and Japan yet to report figures for April. Neither is likely to match Britain’s inflation level…reports Asian Lite News
Inflation in the United Kingdom surged last month to its highest annual rate in 40 years, official data show, piling pressure on the government to step up assistance for households facing a worsening cost-of-living crisis.
Consumer price inflation hit 9 percent in April, the Office for National Statistics (ONS) said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.
The UK now has the highest inflation rate of Europe’s five biggest economies and almost certainly of the Group of Seven countries, with Canada and Japan yet to report figures for April. Neither is likely to match Britain’s inflation level.
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“Countries around the world are dealing with rising inflation,” said UK Chancellor Rishi Sunak, the finance minister.
“Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.
“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.”
The release of the data led to a drop in the value of sterling, which was down 0.6 percent against the United States dollar at 08:16 GMT.
Soaring energy bills were the biggest inflation driver, reflecting last month’s increase in regulated energy tariffs. Knock-on effects from Russia’s invasion of Ukraine mean those bills are likely to jump higher again in October.
An increase in prices charged by restaurants and cafes, as value-added tax rates went back to their pre-pandemic levels in April, also added to the inflation jump last month.
Food prices rose by nearly 7 percent in the 12 months to April, the ONS said.
While the government has said it now has a 22 billion pounds ($27.4bn) package of support for households, much of this is cancelled out by the effect of recent tax increases on workers.
Anti-poverty campaigners called on Sunak to act now, starting with an immediate increase in the value of welfare benefits to match inflation.
“As the price of essentials like food and energy continue to soar, the chancellor’s inaction will make an already desperate situation for many even worse,” said Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, which campaigns on behalf of lower-income households.
A survey published on Tuesday showed two in three people in the UK had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets and just more than a quarter say they have skipped meals.
On Monday, Bank of England Governor Andrew Bailey, speaking to legislators, said food price rises were a major worry as he apologised for “being apocalyptic for a moment”.
The central bank this month forecast inflation would top 10 percent later this year and investors expect it will add to the four interest rate increases it has implemented since December.
“Things are going to get worse before they get better,” Paul Dales, chief UK economist at the Capital Economics consultancy, said of Wednesday’s data.
Retail price inflation – an older measure that the ONS says is now inaccurate, but which is widely used in commercial contracts and to set interest payments on inflation-linked government bonds – jumped to 11.1 percent last month, also the highest since 1982.
There were signs of further inflation pressure ahead as manufacturers suffered the joint biggest increase on record in the prices they pay for their raw materials, which were up by an annual 18.6 percent, matching March’s high.
Factories increased their prices by 14 percent over the 12 months to April, the biggest jump since July 2008.
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