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UK inflation hits 9 percent, the highest since the 1980s

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UK inflation last month rose to its highest annual rate since 1982, putting pressure on Finance Minister Rishi Sunak to step up aid to households facing a deepening cost-of-living crisis.

Consumer price inflation hit 9 percent in April, the Office for National Statistics (ONS) said on Wednesday, beating the peaks of the early 1990s recession, which many Britons remember for sky-high interest rates and widespread mortgage defaults.

The Reuters poll of economists pointed to a value of 9.1 percent.

The UK now has the highest inflation rate of the five largest economies in Europe and almost certainly the Group of Seven (G7) countries, with Canada and Japan yet to report April figures. Both are unlikely to keep up with UK price growth.

“We cannot fully protect people from these global challenges, but we are providing significant support where we can and stand ready to take further action,” Mr Sunak said.

Sterling fell after the data, falling 0.6 percent against the dollar at 0816 GMT.

Soaring energy bills were the biggest driver of inflation, reflecting last month’s increase in regulated energy tariffs.

The fallout from Russia’s invasion of Ukraine means those bills are likely to skyrocket again in October.

Households are facing the greatest cost pressures since records began in the 1950s, according to UK household forecasts, and consumer confidence has fallen to an all-time low.

Anti-poverty activists urged Mr Sunak to act now, beginning with an immediate increase in the value of welfare payments to cope with inflation.

“While the prices of basic necessities like food and energy continue to rise, the Chancellor’s (Treasury Secretary’s) inaction will make an already desperate situation worse for many,” said Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, which advocates for lower-income countries Income households said.

A survey published on Tuesday found that two in three people in the UK had turned off their heating when they would normally have turned it on, nearly half drove less or switched supermarkets and just over a quarter said they skipped meals.

Food prices rose nearly 7 percent in the 12 months to April, according to the ONS.

Speaking to lawmakers on Monday, Bank of England (BoE) Governor Andrew Bailey said rising food prices were a major concern as he apologized for “being apocalyptic for a moment”.

While the government has said it now has a £22bn (€26bn) support package for households, much of that is being wiped out by the impact of recent tax hikes on workers.

A rise in restaurant and cafe prices as VAT rates returned to pre-pandemic levels in April also contributed to last month’s jump in inflation.

The BoE is forecasting inflation this month to top 10% later this year, and investors expect it to come on top of the four rate hikes it has made since December that have taken its policy rate to 1%, the highest since 2009.

“Things will get worse before they get better,” Paul Dales, UK chief economist at Capital Economics, told Wednesday’s data.

Retail price inflation – a legacy measure that the ONS says is now inaccurate but widely used in commercial contracts and to set interest payments on inflation-linked government bonds – rose to 11.1 percent last month, also its highest level since 1982.

There were signs of further inflationary pressures as manufacturers faced the biggest collective increase in the prices they pay for their commodities on record, rising 18.6 percent annually, matching the March high.

Factories hiked prices 14 percent in the 12 months to April, the biggest jump since July 2008.

https://www.independent.ie/business/world/uk-inflation-hits-9pc-highest-since-1980s-41661433.html UK inflation hits 9 percent, the highest since the 1980s

Fry Electronics Team

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