The UK’s interest rate has risen to its highest level since 2009 as the Bank of England attempts to control the spiralling rate of inflation

The UK’s inflation rate has hit 9 per cent,its highest in 49 years as increased prices of fuel and food push the rate up with the biggest increase led by the unprecedented 54% rise in the energy price cap.

Chancellor Rishi Sunak said:

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

Figures released by the Office of National Statistics this morning suggest that there is more inflation in the pipeline as the price of goods produced by UK factories rose 14 per cent in the year to April 2022.

This is up from 11.9% growth in the year to March 2022 while The Consumer Prices Index including owner occupiers’ housing costs grew 7.8% in the year to April 2022.This is up from the 6.2% growth in the year to March 2022

Price of materials and fuels used by manufacturers remained at a record high of 18.6% in the year to April 2022.

Rebecca McDonald, Senior Economist at JRF said:

Inflation has hit a 40-year high. Yet last month, with prices already climbing, the Chancellor chose not to uprate benefits in line with inflation, leaving the basic rate of benefits at its lowest for 35 years. Cuts and freezes to our social security system over the last decade left millions of families on low incomes struggling with the cost of living long before this crisis hit. Now, as the price of essentials like food and energy continue to soar, the Chancellor’s inaction will make an already desperate situation for many even worse.

“The human cost of benefits lagging so far behind inflation is severe: parents skipping meals so their children can eat, families using a single lightbulb to limit electricity use, people cutting back on showers to save water. Allowing this to happen is a choice, and the government can and must choose differently.

“For a start, the government can ensure that benefits match the real cost of living by increasing them in line with inflation. The government should then address the fundamental inadequacy of our social security system so that it actually provides the support it should.”

Helen Dickinson, Chief Executive of the British Retail Consortium, said:

“Inflationary pressures continue to impact businesses as well as households, with soaring energy prices further driving up the Consumer Price Index. These higher energy prices, along with a tight labour market, and the huge costs of moving goods around, are impacting all retailers. Food production has been particularly hard hit, with historically high global food prices, rising costs of animal feed, and disruption in supplies as a result of the Ukraine war.

 

“The Bank of England now expects inflation to top 10% by the end of the year, as many of the rising costs filter down into prices. Retailers are doing their bit to protect consumers by expanding their value ranges and doing all they can to keep the price of essentials down. This can be seen in the BRC’s Shop Price Index, which tracks the price of basic goods, which showed a slower rise in the price of essential f

Rain Newton-Smith, CBI Chief Economist, said:

“Inflation was always likely to hit hard in April given the energy price cap increase. Looking ahead, inflation is likely to stay high, with a resulting historic squeeze in households’ incomes and a tough trading environment for businesses.

“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. Turning good intentions on a permanent investment deduction into a firm commitment, setting out an infrastructure roadmap and publishing a digital strategy are steps which can be taken without delay.”

 

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