Rising energy prices have pushed the UK’s inflation rate to the highest level in four decades, adding to the financial pressure on millions of British households.
The Consumer Price Index (CPI) inflation rose to 9 percent in the 12 months to April, up from an already high 7 percent in March, the Office for National Statistics (ONS) said on Wednesday.
On a monthly basis, CPI rose by 2.5 percent in April 2022, compared with a rise of 0.6 percent in April 2021.
It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982.
Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect. Around three-quarters of the increase in the annual rate this month came from utility bills.”
He cited newly published historical estimates as showing that CPI annual inflation was “last higher 40 years ago.”
Commenting on the new data, Chancellor Rishi Sunak said that rising inflation is a problem for many countries around the world.
“Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices,” he said, adding, “We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.”
Labour’s shadow chancellor Rachel Reeves said the news was “a huge worry for families already stretched.”
She said Labour “can’t wait any longer for action from this out-of-touch government” and would instead “force a vote for an Emergency Budget and for a plan for growth.”
The British Chambers of Commerce (BCC) warned that rising inflation could spark a recession.
“The scale at which inflation is damaging key drivers of UK output, including consumer spending and business investment, is unprecedented and means there is a real chance the UK will be in recession by the third quarter of the year,” said BCC Head of Economics Suren Thiru.
IEA Economics Fellow Julian Jessop said that “monetary policy has also been too loose for too long,” and the central bank should “keep monetary growth under control, so that higher inflation in some sectors is offset by lower inflation elsewhere.”
He also urged the government to step in to “protect the most vulnerable,” as “consumer confidence is also so fragile that it may be too risky to delay the announcement of additional help until the autumn.”
“An effective package should include a mix of benefit increases, tax cuts, and measures to lower energy prices, and mainly be targeted at low-income households,” he said.
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