Recession Fears Loom Over UK As Inflation Hits 40-Year High Mark

At a time when many countries around the world are struggling with problems like high oil prices, inflation and food crisis, another big economy is showing signs of trouble.

Amidst the cost of living crisis, inflation in the UK (United Kingdom) surged to its 40-year high mark last month, with fears of recession looming. Consumer price inflation in the UK hit 9% in April 2022, making it the highest annual rate since 1982, the Office for National Statistics said yesterday.

This has been pressuring finance minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite the risk of recession, as per a Reuters report.

This 9% inflation mark of April 2022 has surpassed the peaks of the early 1990s recession that many people in the UK remember for sky-high interest rates and widespread mortgage defaults.

Britain has the highest inflation amongst Europe's big economies and almost certainly in the Group of Seven, with Canada and Japan yet to report April data. But neither is likely to match Britain's price growth which also looks set to be longer-lasting, as per the Reuters report.

Last month, the International Monetary Fund (IMF) forecasted that Britain in 2023 will face slower economic growth and more persistent inflation than any other major economy.

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Soaring energy bills were the biggest inflation driver, reflecting April 2022's increase in regulated energy tariffs. Effects from Russia's invasion of Ukraine are expected to make those bills jump again in October 2022.

UK Finance Minister Sunak reportedly said, "We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action."

Britain's budget forecasters say households face the biggest cost-of-living squeeze since records began in the 1950s, and consumer confidence has sunk towards all-time lows.

A survey on Tuesday reportedly showed two in three people had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets. Over a quarter of people surveyed say they have skipped meals, as per Reuters.

PA media

Also Read: UK Lands Into ¡®Cost Of Living¡¯ Crisis As Inflation Hits 30-Year High

While the government points to its 22 billion-pound ($27.4 billion) package of support for households so far, much of which is cancelled out by recent tax increases on workers.

The Bank of England this month forecasted that inflation would top 10% later this year and investors expect the central bank will add to the four interest rate increases it has already implemented since December, taking its Bank Rate to 1%, the highest since 2009.

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