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UK inflation hits 30-year high of 6.2 percent as Sunak prepares reaction

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UK inflation soared faster-than-expected last month, hitting a new 30-year high, compounding historic pressures on fiscal finances that Finance Minister Rishi Sunak is under pressure to ease in a budget update later on Wednesday.

The Office for National Statistics (ONS) said consumer prices rose 6.2 percent in February after rising 5.5 percent in January, the highest rate since March 1992.

The median forecast in a Reuters poll of economists had pointed to a figure of 5.9 percent, and only three of the 39 respondents had expected such a strong figure.

The ONS highlighted household energy bills – nearly 25 percent higher than a year ago – and petrol as the biggest drivers of February’s price jump.

In a blow to poorer households, the ONS said food prices have risen across the board, unlike normal times when some prices typically rise and others fall.

Sunak will aim to show by 1230 GMT that he is helping Brits through the worst cost-of-living crisis in decades.

Yael Selfin, chief economist at KPMG UK, said the numbers put pressure on the Bank of England to hike interest rates further, but said it was still likely that price growth would peak shortly.

“Provided inflation expectations can be managed and global commodity prices stabilize into next year, inflation should return to the Bank of England’s 2% target by mid-2024,” Selfin said.

“This may require fewer rate hikes than markets are currently expecting.”

Consumer prices rose 0.8 percent month-on-month, the largest increase in February since 2009, according to the ONS.

Last week, the BoE raised its April-June inflation forecast to a high of over 8 percent – more than four times its target. Regulated household energy bills are set to rise by more than half next month.

Impending inflationary pressures continued to build as manufacturers hiked prices by 10.1 percent, the largest annual increase since September 2008, although in line with Reuters’ median survey forecast.

https://www.independent.ie/business/world/uk-inflation-hits-30-year-high-of-62pc-as-sunak-readies-response-41477694.html UK inflation hits 30-year high of 6.2 percent as Sunak prepares reaction

Fry Electronics Team

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