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CPI inflation hits 40-year high of 9%

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CPI inflation rose by 9.0% in the 12 months to April, up from 7.0% in March, according to the latest ONS data. On a monthly basis, CPI rose by 2.5% in April 2022, compared with a rise of 0.6% in April 2021. April's increase is the biggest monthly jump on record and inflation is now at a 40-year high. CPIH inflation, which includes owner occupiers' housing costs, rose by 7.8% in the 12 months to April 2022, up from 6.2% in March.

The largest upward contributions to the annual inflation rate came from housing and household services (2.76 percentage points, principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport (1.47 percentage points, largely from motor fuels and second-hand cars).

April brought the biggest jump in the inflation rate on record and officials now believe prices have not risen this quickly for forty years. Today’s figures show the impact of the energy price cap rise, taking inflation to 9% - a rate that will feel completely alien to most households and pile yet more pressure on already stretched budgets. And, unfortunately, this is unlikely to be the end of price rises. Bank of England governor, Andrew Bailey, warned this week of food price hikes coming down the track and said the central bank is unable to stop inflation hitting double digits later this year.

“With wage data showing salaries rising at 4.2%, UK households are feeling themselves getting poorer by the month as prices surge ahead of pay. They will be cutting back on non-essential purchases and many will struggle to find the money needed to keep up with the expense of everyday life. That, of course, adds to the risk of growth slowing, and even of recession this year. The Bank of England is stuck for now. Interest rate rises will surely continue to bring down medium-term forecasts for inflation, but that only takes more steam from the economy.

 

Posted by MMB Finance Swindon on 18 May 2022