A customer pays for his fruit and vegetables with a ten pound sterling note, at a trader’s market stall in London on May 12, 2022. – Britain’s economy shrank in March on fallout from soaring inflation, increasing the prospect of the country falling into recession. Official first-quarter data on Thursday showed that following solid output in January, the UK economy posted zero growth the following month and contracted by 0.1 percent in March. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Justin Tallis | Afp | Getty Images
LONDON — U.K. inflation soared to a 40-year high of 9% in April as food and energy prices spiraled, official figures revealed Wednesday, escalating the country’s cost-of-living crisis.
Consumer prices rose by 2.5% month-on-month, fractionally below expectations for a 2.6% climb in a Reuters poll of economists, which had projected a 9.1% annual increase.
The 9% rise in the consumer price index is the highest since records began in their current form 1989, outstripping the 8.4% annual rise posted in March 1992 and well ahead of the 7% seen in March of this year.
The Office for National Statistics has recently published modelled CPI data on an indicative basis for earlier periods, and said its new estimates suggest that inflation would last have been higher “sometime around 1982, where estimates range between approximately 6.5% in December to nearly 11% in January.”
From April 1, the U.K. energy regulator increased the household energy price cap by 54% following a surge in energy prices, including a record rise in global gas prices. The regulator, Ofgem, has not ruled out further increases to the cap at its periodic reviews this year.
The Bank of England has hiked interest rates at four consecutive meetings, raising the cost of borrowing from its historic pandemic-era low of 0.1% to a 13-year high of 1%, as it looks to rein in runaway inflation without stomping out economic growth.
A quarter of Britons have resorted to skipping meals as inflationary pressures and a food crisis conflate in what Bank of England Governor Andrew Bailey recently dubbed an “apocalyptic” outlook for consumers.
Wednesday’s mammoth inflation print delivers another “hammer blow” to households already worried about the cost of living, and there are warnings that the worst is yet to come.
“Unlike in the U.S., U.K. inflation continues to rise for the time being, stoking further fears around the cost of living,” said Richard Carter, head of fixed interest research at Quilter Cheviot.
“It will also add to the pressure on the Bank of England to increase interest rates and get to grips with soaring prices even if, as they admit themselves, many of the factors driving inflation are beyond their control.”
Carter suggested that further pressure is likely to mount on the British government to pull fiscal levers and look to “alleviate the pain on households come the Autumn.”
This is breaking news. Please check back for more.