Bank of England governor Andrew Bailey has warned of an “apocalyptic” situation surrounding runaway food costs – Copyright AFP/File Philip FONG
Britain’s annual inflation rate surged to a 40-year high last month on rocketing energy costs, official data showed Wednesday, sparking opposition calls for the government to announce an emergency budget to combat a cost-of-living crisis.
Consumer prices index inflation hit 9.0 percent in April from 7.0 percent in March, the Office for National Statistics said in a statement.
The ONS estimated that April was the highest level since 1982, and the fastest rate since the current data series began in 1989.
Nations across the world are plagued by decades-high inflation as the Ukraine conflict pushes up energy and food prices, in turn forcing the Bank of England, the US Federal Reserve and others to ramp up interest rates.
The squeeze on UK household budgets tightened further in April due to tax hikes, while wages are failing to keep pace with inflation.
– ‘Global challenges’ –
“Countries around the world are dealing with rising inflation,” said British finance minister Rishi Sunak.
“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.”
The main opposition Labour party, however, wants an emergency budget to help Britons cope with the cost-of-living crunch.
Labour finance spokeswoman Rachel Reeves described the inflation data as “a huge worry for families already stretched”.
“Today, Labour force a vote for an emergency budget and for a plan for growth.”
Labour is also calling for a windfall tax on the energy sector, which has been boosted as gas and oil prices rocketed on supply worries following key producer Russia’s invasion of Ukraine.
– ‘Apocalyptic’ –
Bank of England governor Andrew Bailey on Monday warned of an “apocalyptic” situation surrounding runaway food costs — which he said were fuelled by major wheat and cooking oil producer Ukraine finding itself unable to export its goods.
Addressing British MPs, Bailey spoke also of a “very real income shock” coming from surging energy and food prices.
Britain risks falling into recession with inflation expected to top 10 percent by the end of the year, the BoE warned earlier this month.
It came as the central bank hiked its main interest rate by a quarter-point to one percent to tackle inflation.
That was the fourth straight increase by the BoE, while its key rate now stands at the highest level since 2009.
– Energy cap –
UK consumer prices leapt in April after a cap on domestic gas and electricity was hiked due to spiking wholesale energy costs.
“Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect,” added ONS chief economist Grant Fitzner.
“Around three-quarters of the increase in the annual rate this month came from utility bills.”
Official data showed Tuesday that Britain’s unemployment rate has fallen further to a near five-decade low, but the value of wages continues to erode as inflation soars.
The economy shrank in March on fallout from soaring consumer prices, data showed last week, increasing the prospect of the country falling into recession.
Raised rates have lifted borrowing costs for consumers and businesses, further impacting spending.