Sun, 03 Jul 2022

UK inflation hits 40-year high at 9%

Robert Besser
23 May 2022, 01:39 GMT+10

LONDON, England: UK prices are rising at their fastest rate in 40 years, as higher energy bills are changing spending habits in millions of households.

The national inflation rate jumped to 9 percent in the 12 months to April, up from 7 percent in March, with millions of Britons witnessing an unprecedented 700-a-year pound increase in energy costs.

Higher fuel and food prices caused by the Ukraine war are also driving up the cost of living, while inflation is expected to continue to increase this year.

According to the Citizens Advice Bureau, "The warning lights could not be flashing brighter" for the government to offer more support for households, and debt charities urged anyone finding it difficult to pay bills to seek help earlier, rather than later in the year.

"There are desperate stories behind these figures," said Dame Clare Moriarty, chief executive of Citizens Advice.

Further, the Office for National Statistics said some three-quarters of the increase in inflation in April came from higher electricity and gas bills.

Cheryl Holmes, health analyst and a mother-of-two, said that she was trying to reduce her living costs to "as low as possible" by spending less on food and clothing, as well as canceling TV subscriptions, as reported by the BBC.

Due to a higher energy price cap that began last month, UK homes using a typical amount of gas and electricity are now paying 1,971 pounds per year, on average.

According to think tank the Institute for Fiscal Studies, because the public has to spend far more of their household budgets on gas and electricity, the poorest are being hit hardest by rising prices.

The Office for National Statistics said the costs of food, machinery, furniture and other household goods also rose in April, adding that inflation is now at its highest level since March 1982, when it was 9.1 percent.

Earlier this month, the Bank of England warned that the UK is on the brink of recession, with inflation peaking at over 10 percent later this year amidst further expected rises in energy bills.

Therefore, the government is facing greater pressure to offer more help.

In response to the latest figures, Chancellor Rishi Sunak said he "cannot protect people completely" from rising inflation, as it is a global issue.

Meanwhile, in Parliament during the Prime Minister's Questions, Boris Johnson said he would "look at all the measures" needed to help people struggling with rising bills.

According to the Bank of England, as the rising cost of living is already seeing people spending less money and cutting down on car journeys due to high fuel costs, the economy shrank in March and risks falling into recession next year.

The Bank of England has since responded by raising interest rates to attempt to control prices.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said higher prices in the UK risked becoming embedded due to wages "spiraling upwards" as firms fight to hire talented staffs.

As many people dropped out of the labor market during the COVID-19 pandemic, there are currently more job vacancies than unemployed people in the UK, for the first time since record keeping began.

More Cape Town News

Access More

Sign up for Cape Town News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!