The 7% annual increase in inflation in the UK in March was the highest since 1992.
Photo by Christopher Furlong / Getty Images
LONDON – UK inflation hit 7% annualized in March – a 30-year high – as soaring food and energy prices continue to squeeze consumers and pose a dilemma for retailers. Policymakers.
Consumer prices rose 1.1 percent month-on-month, beating expectations for a 0.7 percent gain in a Reuters poll of economists, which also expected an annual gain of 6. .7%.
The consumer price index rose 7% year-on-year, the highest since March 1992, outpacing the 6.2% increase recorded in February.
From 1 April, the UK’s energy regulator raised the household energy price limit to 54% following a spike in energy prices, including a record increase in global gas prices.
The Bank of England raised interest rates at three consecutive monetary policy meetings, lifting borrowing costs from a historic low of 0.1% to 0.75%, as it looks set to curb runaway inflation without hindering economic growth.
Central banks around the world face a balancing act between addressing soaring inflation and signs of slowing economic growth, with the Russo-Ukrainian war denting the recovery of the economy. economies after the Covid-19 pandemic.
Boris Glass, senior economist and director at S&P Global Ratings, said UK inflation is likely to rise and remain at record highs through 2022.
“The increase in the household energy bill ceiling will increase by one point later this month. High inflation will hit household budgets hard, especially those with lower incomes who are now exhausted. running out of savings during the pandemic,” Glass said. an email on Wednesday.
“While the near-term is forecast to be difficult, much of the high inflation will start to decline as early as next winter, if global energy prices do not continue to rise further.”
However, even if and when inflation declines, it will remain well above the central bank’s target for next year, Glass predicts. He also suggested that if the energy price cap were increased further in October, inflation would fall more slowly and for a significantly longer time.
“The Bank of England is worried about medium-term inflation. While the current high rates are largely due to global energy prices, the fact that domestic commodities are gaining momentum increasingly justifies worries. that’s it,” Glass added.
The global supply shock caused by Russia’s invasion of Ukraine, which shows no signs of abating, means inflation is likely to peak, according to Ambrose Crofton, global market strategist at JPMorgan Asset Management. higher and takes a long time to stay moderate.
In addition to the obvious impact that war has had on consumer utility bills, Russia’s key role as a producer of commodities is not just energy for many metals, Crofton notes. industrial grade and fertilizers”.
“As a result, consumers are likely to see upward price pressure on commodities and food in the coming months.”
