U.K. Inflation Hits 40-Year High, Putting Government on Defensive
LONDON—The U.K.’s annual rate of inflation jumped to a forty-year-high in April, the highest level recorded by an industrialized nation since the start of the global price surge last year.
Consumer prices in April were 9% higher than a year earlier, a jump from 7% in March and the highest inflation rate since March 1982, the Office for National Statistics said. The pace is now the highest recorded by one of the Group of Seven rich economies in about a year.
The pace is also above the 8.5% annual rate of inflation record by the U.S. in March, which had been the sharpest rise since the global inflation surge began with the reopening of many economies as the pandemic eased in early 2021.
The U.K.’s inflation acceleration comes as its economy is slowing and facing a possible recession, economists and politicians say. They have warned that some consumers, especially those on low incomes, could struggle to pay for food and heating next winter, possibly threatening the government’s popularity and
Boris Johnson’s
future as prime minister.
Mr. Johnson’s Conservative Party suffered big losses in May municipal elections, especially in London, where he was once mayor. In addition to the squeeze on household incomes, Mr. Johnson’s support has been weakened by a police investigation that found he had broken his own pandemic lockdown rules. According to an opinion poll conducted by
YouGov
last week, the Conservative Party has the support of 33% of voters, down from 44% at the 2019 national election, while the opposition Labour Party had the support of 38%, up from 32%.
The U.K. changes its ceiling on home energy prices twice yearly, with the next hike coming in October. As a result, rising wholesale energy prices in the months leading up to and during Russia’s invasion of Ukraine only reached British households in April. Home energy prices were 69.6% higher than a year earlier, the fastest rise on record.
The pickup in overall inflation was in line with the Bank of England’s expectations. It expects inflation to peak at over 10%, following an anticipated October hike in home energy prices.
But with the economy contracting in March, and threatened with recession in the coming year, central-bank policy makers indicated this month they would move cautiously with further interest-rate rises. The Bank of England has raised borrowing costs four times since December.
The surge in energy prices, in part a consequence of Russia’s war in Ukraine, has hit household budgets hard, spurring calls for the government to provide further help for the poorest.
Write to Paul Hannon at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
LONDON—The U.K.’s annual rate of inflation jumped to a forty-year-high in April, the highest level recorded by an industrialized nation since the start of the global price surge last year.
Consumer prices in April were 9% higher than a year earlier, a jump from 7% in March and the highest inflation rate since March 1982, the Office for National Statistics said. The pace is now the highest recorded by one of the Group of Seven rich economies in about a year.
The pace is also above the 8.5% annual rate of inflation record by the U.S. in March, which had been the sharpest rise since the global inflation surge began with the reopening of many economies as the pandemic eased in early 2021.
The U.K.’s inflation acceleration comes as its economy is slowing and facing a possible recession, economists and politicians say. They have warned that some consumers, especially those on low incomes, could struggle to pay for food and heating next winter, possibly threatening the government’s popularity and
Boris Johnson’s
future as prime minister.
Mr. Johnson’s Conservative Party suffered big losses in May municipal elections, especially in London, where he was once mayor. In addition to the squeeze on household incomes, Mr. Johnson’s support has been weakened by a police investigation that found he had broken his own pandemic lockdown rules. According to an opinion poll conducted by
YouGov
last week, the Conservative Party has the support of 33% of voters, down from 44% at the 2019 national election, while the opposition Labour Party had the support of 38%, up from 32%.
The U.K. changes its ceiling on home energy prices twice yearly, with the next hike coming in October. As a result, rising wholesale energy prices in the months leading up to and during Russia’s invasion of Ukraine only reached British households in April. Home energy prices were 69.6% higher than a year earlier, the fastest rise on record.
The pickup in overall inflation was in line with the Bank of England’s expectations. It expects inflation to peak at over 10%, following an anticipated October hike in home energy prices.
But with the economy contracting in March, and threatened with recession in the coming year, central-bank policy makers indicated this month they would move cautiously with further interest-rate rises. The Bank of England has raised borrowing costs four times since December.
The surge in energy prices, in part a consequence of Russia’s war in Ukraine, has hit household budgets hard, spurring calls for the government to provide further help for the poorest.
Write to Paul Hannon at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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