News Item: UK inflation rockets to 40-year peak, sparking calls for action
Britain’s inflation rate has surged to a 40-year high on soaring energy costs, official data showed Wednesday, sparking calls for an emergency government budget to combat a worsening cost-of-living crisis.
Annual inflation soared to 9.0 percent in April from 7.0 percent in March, the Office for National Statistics said, delivering another heavy blow to Britons whose wages were already failing to keep pace with surging prices.
April’s headline figure marked the highest inflation rate since 1982, the ONS added.
Major economies are being hit by decades-high inflation as the Ukraine war and lifting of Covid lockdowns fuels especially energy and food prices.
This in turn has forced central banks including the Federal Reserve and Bank of England to hike interest rates.
According to the ONS, the squeeze on UK household budgets tightened further in April also on a British tax hike as the government looks to improve state coffers battered by Covid support.
– ‘Global challenges’ –
Despite rising calls for Britain’s Conservative government to ease the pain of soaring inflation, finance minister Rishi Sunak insisted the state “cannot protect people completely”.
Reacting to Wednesday’s data, he blamed the situation on “global challenges” and noted Britain was not alone in dealing with rocketing prices.
The main opposition Labour party again demanded an emergency budget to help Britons cope with a threat of recession.
“Our country faces a cost-of-living crisis, and a growth crisis,” said Labour finance spokeswoman Rachel Reeves.
“We need an emergency budget now to tackle the cost of living crisis, and we need a real plan for growth.”
Labour is urging also a windfall tax on the energy sector, whose revenues have soared on rocketing oil and gas prices owing to supply fears after key producer Russia’s invasion of Ukraine.
The Confederation of British Industry lobby group said the “historic” cost crunch for households created a “tough trading environment” for businesses — and urged more assistance from the government of Prime Minister Boris Johnson.
– ‘Apocalyptic’ –
Bank of England governor Andrew Bailey on Monday warned of an “apocalyptic” situation surrounding runaway food costs — which he said were fuelled by major wheat and cooking oil producer Ukraine finding itself unable to export its goods.
Britain risks entering recession — or two quarters of economic contraction in a row — with inflation set to top 10 percent this year, the BoE has forecast.
The bleak prediction earlier this month came as the central bank lifted its main interest rate by a quarter-point to one percent in a bid to bring down inflation.
That was the fourth straight increase by the BoE, taking its key rate to the highest level since 2009.
UK consumer prices leapt in April also after a cap on domestic gas and electricity was hiked owing to spiking wholesale energy costs.
“Around three-quarters of the increase in the annual rate… came from utility bills,” noted ONS chief economist Grant Fitzner.
Official data Tuesday showed that while Britain’s unemployment rate has fallen further to a near five-decade low — inflation continues to erode the value of wages.
– ‘Nowhere to hide’ –
Britain’s economy shrank in March on fallout from soaring consumer prices, official data recently revealed.
“Household budgets are crumbling under the pressure of spiralling inflation,” Interactive Investor analyst Myron Jobson said.
“There is nowhere to hide for consumers as inflation has been most acute on unavoidable household costs like food, energy, housing and transportation.”
Raised interest rates are meanwhile lifting borrowing costs for consumers and businesses, exacerbating Britain’s cost-of-living crisis.