UK inflation reaches 11.1%, its highest level in 41 years

Rising inflation in the United Kingdom (UK) is becoming increasingly worrisome, with the latest data showing that inflation in October was 11.1%. This data released by the Office for National Statistics (ONS) is the highest in 41 years, indicating that the Rishi Sunak-led government faces further headwinds in the near term.

The growth in inflation is mainly due to the high costs of electricity, gas and other fuel sources.

Modeled estimates of consumer price inflation suggest that the CPI rate would have last been higher in October 1981, when the annual inflation rate estimate was 11.2 percent“, the ONS said.

While annual growth in the consumer price index was high, it was moderate when compared to the previous month, rising only 2 percent. The cost of housing and household services rose a record 11.7 percent in October. This is up from 9.3 percent in September of this year.

Read:  Colombian authorities find a new corpse with signs of violence in the street

In October 2022, households pay, on average, 88.9% more for electricity, gas and other fuels than they did a year ago“, the ONS said. “Domestic gas prices have seen the largest increase, with prices in October 2022 more than double those of a year earlier.

While energy prices remain high, contributions from food and beverages especially soft drinks have increased by 16.4% through October 2022. This food inflation is the highest since 1977.

UK inflation and government response

The UK is currently in one of the most troubling recessions on record as the Bank of England has continued to exercise monetary policies to control inflation. Recently, the Bank of England raised interest rates by 75 bases earlier this month, bringing the total bank rate to 3%. Given current events, the bank is expected to continue to raise interest rates until the overall bank rate reaches 4.5%.

Read:  Ukraine raises to about 240 the number of children killed since the start of the war with Russia

Mike Bell, global market strategist at JPMorgan Asset Management, said the inflation numbers run counter to the Bank of England’s actions, which posit that raising interest rates will curb inflation.

We are not so convinced. What has been consistently underestimated are the inflationary pressures arising from the tightness of the labor market“, said Mr. Bell. “Although job openings and employment fell slightly in yesterday’s labor market report, wage growth continued to rise. With headline inflation expected to remain high for a few more months, workers may yet ask for a wage increase to protect their disposable income.

By tomorrow, UK finance minister Jeremy Hunt is expected to deliver a new budget statement. Among other things, he is expected to announce a new stealth tax hike in an attempt to mitigate the £50 billion-plus deficit currently visible in the government’s wallet.

Overall, U.K. inflation growth and monetary policy should be on par to reach equilibrium, but the timing of this remains unpredictable.

The Best Online Bookmakers February 29 2024

BetMGM Casino