Last month, British inflation reached its highest annual rate since 1982, putting pressure on finance minister Rishi Sunak to scale up his assistance to consumers facing a deteriorating cost-of-living issue.
Consumer price inflation reached 9% in April, according to the Office for National Statistics, surpassing the peaks of the early 1990s recession, which many Britons remember for sky-high interest rates and many mortgage defaults.
With Canada and Japan set to release April statistics, Britain currently has the highest inflation rate of Europe’s five largest economies and almost likely the Group of Seven countries. Neither is likely to outperform Britain’s price growth.
‘We cannot shield people totally from these global difficulties,’ Sunak added, ‘but we are offering tremendous support where we can and stand ready to take additional action.’
Following the release of the report, sterling lost 0.6 percent versus the dollar at 0816 GMT.
The main inflation driver was rising energy expenses, which reflected last month’s hike in regulated energy pricing. Because of the knock-on effects of Russia’s invasion of Ukraine, those bills are certain to rise again in October.
According to Britain’s budget forecasts, households are experiencing the greatest cost-of-living squeeze since records began in the 1950s, and consumer confidence is at an all-time low.
Anti-poverty activists urged Sunak to act immediately, beginning with an immediate increase in the value of welfare benefits to reflect inflation.
‘As the cost of essentials like food and energy continues to rise, the Chancellor’s (finance minister’s) inactivity will exacerbate an already desperate position for many,’ Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, which advocates for lower-income people, warned.
According to a poll released on Tuesday, two out of every three people in the United Kingdom have left their heating off when they would normally have put it on, nearly half are driving less or changing supermarkets, and slightly more than a quarter have skipped meals.
According to the ONS, food costs increased by over 7% in the year to April.
Speaking to MPs on Monday, Bank of England Governor Andrew Bailey expressed concern about rising food prices and apologised for ‘being apocalyptic for a second.’
While the government claims to have a 22 billion-pound ($27.4 billion) package of household assistance, much of this is offset by the effect of recent tax increases on workers.
Restaurant and café prices rose last month as value-added tax rates returned to pre-pandemic levels in April, contributing to the month’s inflation spike.
The Bank of England forecasted this month that inflation would reach 10% later this year, and investors expect it to add to the four interest rate rises it has implemented since December, raising the Bank Rate to 1%, its highest level since 2009.
‘Things are going to get worse before they get better,’ Paul Dales, chief UK economist at Capital Economics, said of the statistics released on Wednesday.
Retail price inflation surged to 11.1 percent last month, the highest since 1982, according to the ONS, but is commonly used in commercial contracts and to determine interest payments on inflation-linked government bonds.
Manufacturers’ raw material prices rose by an annual 18.6 percent, matching March’s peak, signalling greater inflation pressure ahead.
Prices at factories grew by 14.0 percent in the year to April, the largest increase since July 2008.
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