Inflation in the UK accelerated in January, at the fastest rate in three decades, adding to fears of a choking household budget a day after separate data showed wage growth failed to keep pace with prices.
The Consumer price index up 5.5 percent from a year earlier, the highest since March 1992 and up from a 5.4% gain in December, the Office for National Statistics said on Wednesday. It was slightly higher than economists surveyed by Bloomberg as higher food and energy prices offset the decline in transportation and clothing.
The inflation rate is expected to continue to rise. The Bank of England rates would peak above 7 percent in the spring, when one increase the government energy bill price ceiling takes effect in April and stays above 5% for the rest of the year. The central bank has raised interest rates twice in the past two months and higher-than-expected inflation is fueling speculation that policymakers will raise rates again as soon as next month.
Inflation data released on Wednesday “aimed at highlighting a recent global trend – higher and more persistent inflation that has kept central banks on their toes and opened the door to rate hikes.” more this year,” Ambrose Crofton, strategist at JP Morgan Asset Management, said in emailed comments.
In the United States of America, Prices are rising at the fastest rate in 40 yearsand in the euro area The annual inflation rate rose to 5.1% in January – a level not seen since the single currency was established.
Governor of Bank of EnglandAndrew Bailey said this month a rate hike is needed to bring inflation back to the bank’s 2% target. But the outlook for the economy as a whole is becoming increasingly bleak. The bank forecasts that the economy will grow more slowly as high inflation reduces wages and consumer spending, often an important driver of economic growth.
Wage pressure has arrived. Although employers are paying higher wages to fill positions, in the final quarter of 2021 pay does not include bonus reduction 0.8% from a year earlier when inflation is taken into account, the statistics office said on Tuesday.
The government is accused of not doing enough to support low-income people. The majority of UK households are expected to receive some relief from the increase in energy bills, but it will cover only a fraction of the increase. Interests are expected to grow about 3% in April, less than half the rate of inflation expected at the time.
The British Chambers of Commerce say businesses also need more help to deal with inflation, especially from rising energy bills.
Suren Thiru, head of economics at the British Chambers of Commerce, said: “Inflation is likely to be a significant drag on UK economic output this year by weakening it. spending power of consumers and harm the finances and ability of companies to invest”.
https://www.nytimes.com/2022/02/16/business/uk-inflation-rate.html UK inflation climbs to 5.5 per cent, highest in 30 years