In October, inflation in the UK hit a 41-year high. Transportation, food, and energy costs put pressure on households all around the nation.
Statistics show that the country’s inflation increased by 11.1%, which exhausted several industries. According to economists, the consumer price index will rise by 10.7% from one year to the next. The rise in September was virtually the same, 10.1%.
The new administration introduced the Energy Price Guarantee Program, led by newly appointed Prime Minister Rishi Sunak. The government will assist individuals, families, and companies in the program in reducing their gas and energy costs. The government program must, however, keep pace with inflation.
“Indicative modeled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%,” said the Office for National Statistics.
Household expenses, such as energy costs, increased by 11.7% compared to the same time in the previous year, up by 9.3% from September 2022.
“In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago. Domestic gas prices have seen the largest increase. With prices in October 2022 being more than double the price a year earlier,” the ONS added.
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Inflation in the country
Food and other beverage costs soared 16.4% in the year before to October. Since September 1997, this was the commodity’s biggest increase. According to the Bank of England, the UK is reportedly experiencing its longest recession on record. The government and central bank are now in discussions to come up with a strategy to support the nation’s population and economy in light of the current circumstances. To prevent the worsening of inflation is their aim.
In light of the inflation, Mike Bell of JP Morgan Asset Management questioned the central bank’s decision to “modestly” raise interest rates. Bell asserts that the Bank of England’s current interest rates could not be sufficient to control inflation and finally bring it down to the target rate of 2%.
“We are not so convinced. What has been underestimated consistently has been the inflationary pressures stemming from the tight labor market,” he said.
“Although vacancies and employment eased marginally in yesterday’s labor market report, wage growth continued to push higher. With headline inflation expected to stay elevated for some months yet, workers may still ask for more pay to protect disposable income,” Bell added.
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The fiscal statement
This Thursday, Jeremy Hunt, the department’s newest finance minister, will unveil the nation’s new fiscal statement. The statement will outline the UK’s financial situation and how the government intends to address these problems. According to sources, the announcement will reportedly suspend tax exemptions and rates.
“While anything is possible tomorrow, if the government opts to rely on continuing high levels of inflation as expected, it would likely be a safe bet. The dip in inflation seen back in August looks to have been a fluke. And it is unlikely that a fall in inflation will materialize any time soon,” said Quilter financial expert Rachael Griffin.
Photo Credit: Neil Hall