There are growing fears of a recession as the latest statistics released on Wednesday show that the UK economy’s inflation has hit a 40-year high at 9 per cent.
The Office for National Statistics (ONS) found that inflation, which is the rate at which prices rise, has surged from an already high 7 per cent in March. UK Chancellor of the Exchequer Rishi Sunak, who is under increasing pressure for further measures to ease the cost of living crisis amid rocketing household bills, blamed the inflation hike on global energy prices.
“Countries around the world are dealing with rising inflation. Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices,” said Sunak.
“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 Indian-origin finance minister said.
ONS data showed a broad-based hike in prices for everyday goods and services during the month of April, with a majority linked to a 54 per cent increase in the energy price cap at the start of the month – the rate at which energy firms can set household prices for fuel. The highest prices on record for both petrol and diesel are among the other major factors driving inflation.
"Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect,” said ONS chief economist Grant Fitzner.
“Steep annual rises in the cost of metals, chemicals and crude oil also continued, along with higher prices for goods leaving factory gates. This was driven by increases for food products, transport equipment and metals, machinery and equipment," he said.
Earlier this month, the Bank of England released its forecasts to warn that inflation will top 10 per cent later this year – with food prices set to provide greater upwards pressure due to crucial supplies of things like wheat being held up in war-torn Ukraine. The Bank has warned that the strain could result in a recession and surge in unemployment.
The Opposition Labour Party shadow Chancellor Rachel Reeves said that the news was a huge worry for families "already stretched".
"We can't wait any longer for action from this out-of-touch government," she said.
The Opposition has been calling on the Conservative Party government for a one-off "windfall" tax on energy companies, who registered big profits, to help ease the pressure on people's finances. The government, however, has indicated it would be inclined to take such action only if the energy firms do not invest enough cash into new UK projects.
The Resolution Foundation, a think tank that focuses on living standards, claimed that inflation for the poorest households was already topping 10 per cent as they spend a greater share of their income on energy.