Inflation in the United Kingdom soared to an eye-watering 40-year high yesterday with fears things were only going to get worse as the government faces massive pressure to come up with cost-of-living aid.
The headline Consumer Price Index (CPI) rate rose to 9 per cent in April – up from 7 per cent in March and the peak since 1982, when Margaret Thatcher was Prime Minister, the Falklands War was about to start, and unemployment was running at 3 million.
The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of the year amid the biggest squeeze on incomes since records began in the 1950s. That would be more than five times its 2 per cent target, the Daily Mail reported.
Inflation has long been seen as one of the biggest threats to economies. In extreme examples, it has spiralled out of control and sparked panic in several countries.
The German Weimar Republic effectively collapsed after the value of the mark went from around 90 marks to the US dollar in 1921 to 7,400 marks to the dollar in 1921.
In Zimbabwe between 2008 and 2009 the monthly inflation rate was estimated to have reached a mind-boggling 79.6billion per cent.
Although inflation has faded in the minds of Britons who have become used to ultra-low interest rates and stable prices, it caused chaos in the country in the 1970s.
However, UK’s Chancellor of the Exchequer, Rishi Sunak, insisted that ‘countries around the world are dealing with rising inflation’, and he ‘stands ready’ to offer further support to Britons – while stressing that he cannot ‘protect people completely’ from pain.
The skyrocketing UK inflation rate is happening as Nigeria’s own index rose to 16.82 per cent in April, recording the highest jump in eight months, according to the National Bureau of Statistics (NBS).
But many Nigerians think that the figure could be higher, given Nigeria’s perceived penchant for interfering with official data.
Last month, the consumer price index, which measures the rate of increase in the price of goods and services, jumped amid increases recorded in food and energy prices.
On Monday the Nigeria’s statistics bureau stated that year-on-year, the rate was 1.3 per cent points lower compared to 18.12 per cent recorded in April 2021. However, the new annual rate was the highest since September 2021 (16.63 per cent).
According to the NBS, urban inflation rate increased to 17.35 per cent (year-on-year) in April 2022 from 18.68 percent recorded in April 2021, while the rural inflation rate increased to 16.32 percent in April 2022 from 17.57 percent in April 2021.
The urban index, it said, rose to 1.78 per cent in April 2022, up by 0.02 from the rate recorded in March 2022 (1.76), while the rural index also rose to 1.74 per cent in April 2022, up by 0.01 from the rate that was recorded in March 2022 (1.73) per cent.
But in the UK, opposition parties are urging an emergency budget to slash Value Added Tax (VAT) and help struggling Britons who are ‘on the brink’.
Experts warned that ‘this is what Stagflation looks like’, as the UK economy stalls and teeters towards recession after the pandemic and Ukraine war caused chaos.
Analysts said another interest rate hike next month is now ‘inevitable’, potentially to 1.25 per cent, as the Bank of England scrambles to stop prices spiralling out of control, Daily Mail reported.
But the pound still dipped further against the US dollar as investors priced in the increasingly grim situation. The unrelentingly ‘miserable’ news continued with pump prices reaching new records, of 167.64p for petrol and 180.88p for diesel.
In a further headache for ministers, the RPI measure of inflation has rocketed even higher to 11.1 per cent in April – with unions threatening strikes unless that is used as the basis for pay rises in the public sector.
United chief Sharon Graham threatened strike action against employers who do not give pay rises in line with inflation, saying calls for wage restraint should be directed at chief executives.
The average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p, higher than the previous record of 167.3p set on March 22 – the day before Mr Sunak announced a 5p cut in fuel duty. Diesel prices have risen to 180.9p.
Tories have warned the Bank of England not to overreact now by pushing up interest rates too quickly, dooming the country to recession. The average UK house price jumped by £24,000 in the year to March, according to official figures.
Chancellor Sunak, in a statement after the figures yesterday blamed the rising energy prices. “Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.
“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.
“We’re saving the average worker £330 a year through reducing National Insurance Contributions, changing Universal Credit to save over a million families around £1,000 a year, and providing millions of families with £350 each this year to help with their energy bills,” he said.
Trade Secretary Anne-Marie Trevelyan warned there are likely to be a ‘couple of bumps to get through’ before inflation settles down. “This is something we have to tackle across the board,” she said.
Experts have warned that the poorest households are bearing the brunt of rising prices, with analysis by economic think tanks estimating they face a rate closer to 11 per cent.