UK inflation to 9 percent

EconomyrightMay 18 ’22 17:01Authorright BNR Web Editor

Inflation in the UK rose to 9 percent last month, the highest annual figure in 40 years. That’s according to the Office for National Statistics (ONS), the British version of CBS. Thus, inflation surpassed the peak of the recession in the early 1990s, remembered by many Britons for the exorbitantly high interest rates and widespread mortgage defaults. Pressure on the British government to support the underprivileged is growing.

At that 9 percent, the UK now has the highest inflation rate of Europe’s five largest economies and almost certainly of the G7 countries (Canada and Japan have yet to publish their April figures).

Read also | UK Brexit minister: EU won’t tear up UK trade deal

Lower the pound sterling

UK Treasury Secretary Rishi Sunak said he could not fully shield people from global challenges (such as rising international energy prices, ed.), but said he offered significant support “where we can” and was prepared to take further action. After the ONS released the figures, the value of the pound sterling fell, trading 0.6 percent lower against the US dollar.

UK inflation was mainly driven by rising energy bills, but rising restaurant and pub prices also contributed to last month’s spike in inflation. According to the ONS, food prices have risen nearly 7 percent in the 12 months to April. Admittedly, the UK government has said it will propose a nearly £26 billion bailout package for ailing households, but that move has been largely offset by recent tax hikes for workers.

Read also | Prime Minister Johnson: Northern Ireland’s Brexit deal untenable

poverty trap

While the government has said it now has a £22bn ($27.4bn) household support package, much of that has been offset by the effects of the recent tax hike on workers. A survey published Tuesday found that two in three Britons have their heater where they normally turn it on, nearly half drive less or change supermarkets and more than a quarter say they have skipped a meal.

The central bank forecast this month that inflation will rise to 10 percent later this year and investors expect it to implement the four rate hikes it has implemented since December.

Maxwell Quinn

"Incurable alcohol fan. Proud web practitioner. Wannabe gamer. Music buff. Explorer."

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