It is reaching a new high in June: 9.4% YoY and could climb as high as 11% by the end of the year, according to forecasts.
In Chatham, in the south-east of the United Kingdom, several businesses had to close amid continued economic uncertainty.
Inflation in the United Kingdom accelerated in June at 9.4% YoY, hitting a new 40-year high – in the midst of the cost of living crisis – which could push the Bank of England to tighten its rate policy.
The acceleration in prices in June was fueled by fuels and food, the Office for National Statistics (ONS) said in its monthly report published on Wednesday, while housing and transport prices are also among the inflationary factors.
In May, inflation reached 9.1% year on year. The Bank of England (BoE) estimates that it could rise to more than 11% by the end of the year, boosted by the Russian invasion of the country. Ukraine, the soaring gas prices it has caused, and a very tight labor market.
Especially since the current weakness of the pound threatens to further exacerbate inflation in the coming months, warns Karl Thompson, an economist at the CEBR think tank.
Bank of England Governor Andrew Bailey warned on Tuesday that the monetary institute, in an attempt to stem this price surge, could accelerate the pace of its rate hikes by raising them 0.50% in August. It would be the biggest turnaround in 27 years.
For Paul Dale, of Capital Economics, the Bank of England will probably raise its interest rates over the months from the current 1.25% to 3% even if the x27;economy is in recession.
The UK economy is indeed seeing the clouds gathering. The IMF predicted in April that the UK would see the worst growth of the G7 countries next year. The Bank of England predicts a contraction.
As for inflation, it is currently the worst of the G7 countries according to the latest available statistics and should remain so in the coming months, according to several forecasting organizations.
For comparison, price inflation in the euro zone stood at 8.6% year on year last month. It reached 9.1% year on year in June in the United States and 2.1% in Japan in May.
Countries around the world are dealing with rising prices and I know how difficult it is for people here in the UK, so we are working alongside the Bank of England to bring it down, reacted the Minister of Economy and Finance, Nadhim Zahawi, highlighting government aid for low-income households.
UK inflation hits 40-year high Boris Johnson in Downing Street and will likely be high on the next prime minister's agenda as a tough winter looms.
Critics are piling up about the central bank's strategy, coming in particular from conservative candidates, to the point that Andrew Bailey thought it a good Tuesday to recall the importance of the independence of the central bank.
“The value of a regime is measured in bad times, not good times.
— Andrew Bailey, Governor of the Bank of England
In the meantime, escalating prices amid a labor shortage in the UK are fueling wage demands and strike action.
On Tuesday, the latest official statistics on labor x27;employment reported a fall at a record pace in real wages, that is to say excluding inflation.
Almost half of young people in 16 to 25 year olds didn't always have enough to eat last year, notes a study commissioned by the homeless youth aid association Centrepoint.
And the wealth gap between the wealthiest 10% of households in the UK and those in the middle range has reached a new record, underlines the Resolution foundation, which fights against poverty and inequalities.
This gap not only means that acquiring a home becomes an unattainable dream for many, but also that it becomes more difficult for more in addition to Britons to withstand unexpected economic shocks or inflationary pressures, underlines the foundation in a study.