Inflation in the United Kingdom reached 9 per cent in April, the highest level in more than 40 years, after soaring gas and electricity bills have intensified the crisis in the cost of living facing households.
The rate of consumer price inflation was close to the expectations of economists and is almost double the rate that the Bank of England expected only six months ago.
With economic activity slowing during the first quarter of the year, the British economy is experiencing the worst stagflation – weak growth coupled with high inflation – since the second oil shock of the 1970s.
The sharp rise in the cost of living will put pressure on Chancellor Rishi Sunaka to speed up his promises to help poorer families and retirees cope with rising prices much faster than their incomes.
In response, Sunak issued a statement blaming global energy price shocks. “We cannot fully protect people from these global challenges, but we provide significant support where possible, and we are ready to take further action,” he said.
CPI inflation rose from 7 percent in March to 9 percent in April, reaching the highest level among the G7 countries and among the highest of all the world’s advanced economies.
The Bureau of National Statistics said that the April increase in the price cap by 54 percent caused almost three-quarters of the rise in inflation this month, but prices also rose rapidly in almost all categories of expenditure and goods leaving the factory. .
Grant Fitzner, chief economist at ONS, said the increase in raw materials was increasing the pressure on manufacturers to pass on their higher costs. “It was caused by an increase in food products, transportation equipment and metals, machinery and equipment,” he said.
With inflation well above the Bank of England’s 2% target and service prices also rising 4.7 percent from a year earlier, widespread evidence that inflation is increasingly persistent is likely to add strength to those who want the central bank to continue raise interest rates to keep the economy cool.
The Bank of England tried to avert this blame this week for failing to control inflation. BoE Governor Andrew Bailey accused global shocks of rising prices and said “we can’t do much about it.”
Yael Selfin, chief economist at KPMG, said: [bank’s] The Monetary Policy Committee will be interested in showing that they can keep inflation expectations anchored at the lower end. The key risk facing policymakers is if today’s high inflation rate becomes part of wage negotiations, which will put further upward pressure on prices. “
Retail price inflation, using a discredited indicator that still supports the cost of indexed government debt, rose to 11.1 percent in April, a 40-year high.