UK inflation reaches 9%
UK inflation rose to 9% last month, the highest annual figure in 40 years. This is written by the Office for National Statistics (ONS), the British edition of CBS. Inflation thus surpasses the stagnation peaks of the early 1990s, which many Britons remember from soaring interest rates and widespread mortgage defaults. Pressure is mounting on the British government to support the less well-off.
At that 9 percent, the UK now has the highest inflation among the five largest European economies, almost certainly the G7 (Canada and Japan haven’t released their April figures).
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depreciation of the pound sterling
British Chancellor of the Exchequer Rishi Sunak said he could not fully protect people from global challenges (such as rising international energy prices, ed.), but said he was providing significant support “where we can” and was ready to take further action. After the Office for National Statistics released the figures, the pound slid, dropping 0.6 percent against the US dollar.
UK inflation was mainly driven by higher energy bills, but the increase in restaurant and pub prices also contributed to higher inflation last month. According to the Office for National Statistics, food prices rose nearly 7 percent in the 12 months through April. Admittedly, the UK government said it would propose a rescue package of nearly £26 billion for struggling families, but the move was largely offset by a recent tax increase for workers.
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poverty trap
While the government has said it now has a £22 billion ($27.4 billion) family support package in place, much of that has been offset by the impact of recent tax increases on workers. A survey published on Tuesday found that two out of three Britons have turned off the heating where they would normally turn it on, less than half are by car or change supermarkets, and just over a quarter say they have skipped meals.
The central bank this month forecast inflation will rise to 10 percent later this year and investors expect it to make four interest rate hikes since December.
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