Inflation reaches fresh record high at 9 per cent

Rising prices are set to cause the biggest drop in living standards since the 1950s

Anna Isaac
Wednesday 18 May 2022 08:54
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Rising Energy Costs Expected to Drive Inflation to an All-Time High in the UK

Prices rose at their fastest rate in more than 40-years in the 12 months to April as households struggle with a sharp increase in energy bills.

Inflation climbed to a fresh record high of 9 per cent last month, up from 7 per cent in March, following a £700 increase to energy bills, the Office for National Statistics reported on Wednesday. Around three-quarters of the overall surge in inflation came from higher energy bills.

It comes after Andrew Bailey, governor of the Bank of England (BoE), warned of “apocalyptic” food prices in the months ahead due to the war in Ukraine. The central bank has said that inflation likely to keep rising to around 10 per cent this year.

Mr Bailey said he and other interest rate setters at the BoE felt “helpless” in the face of price growth generated overseas and imported into the UK.

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The chancellor, Rishi Sunak, who has come under pressure to offer more support to poorer households as benefits fail to keep pace with rising prices said the Treasury could not shelter people from global price pressures.

“Countries around the world are dealing with rising inflation. Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.

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

Measures taken by the Treasury to address the cost of living crisis, including such as a £150 rebate on council tax payments for some households have been called a “postcode lottery” by charity leaders, as it may fail to reach some of the most vulnerable households.

There is a growing clamour from business groups, charities and the opposition Labour party for an emergency budget in order to offer more support to those who are struggling most.Rachel Reeves MP, Labour’s shadow chancellor said: “Today’s inflation data will add to the worries families already face as prices soar and pay packets are crunched.

“It makes it even more unconscionable that – while they pile taxes on working people in the midst of this crisis – the Conservatives voted last night against a windfall tax on oil and gas producer profits to cut families’ energy bills,” she added.

The government has wavered on the issue of whether or not to introduce such a tax, with some senior cabinet ministers expressing concerns that it could discourage investment by firms into the UK economy.

Rain Newton-Smith,  chief economist of business lobby group, the CBI, said inflation is “likely to stay high, with a resulting historic squeeze in households’ incomes and a tough trading environment for businesses.”

She added: “It is critical the government explores options to help people facing real hardship now, and support cashflow for vulnerable firms. Stimulating business investment is also crucial, to both plug the near-term gap in growth and to shore up the economy’s potential to withstand future shocks.”

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