Inflation numbers news live: Cost of living crisis deepens as price rises hit 40-year high



<p>Inflation has hit its highest level in 40 years amid rising cost of living</p>
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Inflation has hit its highest level in 40 years amid rising cost of living

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Inflation has reached its highest level in 40 years amid the rising cost of living.

The rate shot up to a new all-time high of 9 percent last month, up from 7 percent in March, following a £700 increase in utility bills.

It comes after Bank of England governor Andrew Bailey warned of “apocalyptic” food prices in the coming months due to the war in Ukraine. The central bank has said inflation is likely to continue rising to around 10 percent this year.

The Confederation of British Industry also warned of a “historic tight” in household finances and a “difficult trading environment” for businesses.

The company’s organization stepped up pressure on Chancellor Rishi Sunak to enlist additional help to meet the rising cost of living.

The British Chambers of Commerce said the “unprecedented” impact of rising inflation meant a “real chance” of a recession later this year.

The head of the economy, Suren Thiru, called on Mr Sunak to reverse the increase in National Insurance premiums and reduce VAT on business energy bills to 5 percent.

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Think tank defends Bank of England for not raising interest rates sooner

The chief of a British think tank has defended the Bank of England after critics claimed they should have raised interest rates sooner.

Torsten Bell, the director of the Resolution Foundation, which works for low- and middle-income families, told BBC Radio 4’s Today The Bank of England’s program “were slow to see the pace and magnitude of this inflation shock that came through this year”.

“I think they would go too far to say, look, if the Bank of England had raised interest rates a little earlier, this wouldn’t be happening now,” he said.

“That’s total and sheer nonsense.

“Ultimately, the Bank of England raising interest rates is not about avoiding this pain of utility bills.

“It’s about avoiding future pain of inflation becoming embedded as a very tight labor market creates wage pressures and that could lead to wage pressures that we cannot sustain without another round of inflation.”

Chiara GiordanoMay 18, 2022 08:57

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Inflation of poorest households ‘could be closer to 11 percent’

The Institute for Fiscal Studies economic think tank suggested that inflation for the poorest household could be closer to 11 percent.

“As the poorest households spend more of their total budget on gas and electricity, we see inflation hitting the poorest households harder,” said Heidi Karjalainen and Peter Levell of the think tank.

In April, the lowest 10 percent of the population experienced inflation of 10.9 percent, which was three percentage points higher than the inflation of the richest 10 percent.

“Most of this difference stems from the fact that the poorest households spend 11 percent of their total household budget on gas and electricity, compared to 4 percent for the richest households.”

Chiara GiordanoMay 18, 2022 08:45

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Impact of rising inflation on poorer households higher at 10.2%, think tank says

The impact of rising inflation is being felt more strongly in poorer households, according to the Resolution Foundation’s living standards think tank.

While CPI inflation hit 9 percent in April, the think tank estimates inflation for the poorest households was even higher at 10.2 percent because they spend a larger portion of their budget on energy bills, which have risen sharply.

Jack Leslie, senior economist at the Resolution Foundation, said: “Inflation reached a 40-year high last month on a sharp rise in energy bills and the highest food price inflation in a decade.

“These recent inflation factors mean that lower-income households are facing the most severe cost pressures, with their inflation rate already reaching double digits.

“Inflationary pressures are likely to increase throughout the year as the effects of higher energy prices feed through to businesses and consumers’ wallets.

“No one knows how long this pressure will last, or how workers will respond through higher wage demands, which is why the Bank is facing harsh judgment on the pace and magnitude of interest rate hikes.

“But one thing is certain: the government needs to support those lower-income families even more specifically at the sharp end of this crisis.”

Chiara GiordanoMay 18, 2022 08:35

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‘Real chance’ of recession later this year

The British Chambers of Commerce said the “unprecedented” impact of rising inflation meant a “real chance” of a recession later this year.

BCC economics chief Suren Thiru called on Rishi Sunak to reverse the increase in National Insurance contributions and cut VAT on business energy bills to 5 percent.

He said: “The jump in UK inflation in April is eye-catching and underscores the growing cost of living crisis facing households and the damaging pressures on businesses’ ability to invest and operate at full capacity.

“The marked acceleration in the nominal rate in April reflected continued upward pressure on prices from rising energy and commodity costs, as well as the rise in the energy price cap and the reversal of the on-trade VAT cut in the month.

“The scale at which inflation is hurting the main drivers of UK manufacturing, including consumer spending and business investment, is unprecedented and means there is a real chance the UK will find itself in recession in the third quarter of the year.”

Another rate hike in June was “inevitable,” but it would do little to address the global factors driving inflation, he said.

Chiara GiordanoMay 18, 2022 08:19

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Warning of ‘historic tightness’ in household finances

The Confederation of British Industry warned of a “historic tight” in household finances and a “difficult trading environment” for companies.

The company’s organization stepped up pressure on Chancellor Rishi Sunak to enlist additional help to meet the rising cost of living.

CBI chief economist Rain Newton-Smith said: “Inflation would always hit hard in April given the rise in the energy price ceiling.

“Looking ahead, inflation is likely to remain high, putting historic pressures on household incomes and a difficult trading environment for businesses. It is critical that the government explore options to help people now facing real hardship, and support cash flow for vulnerable companies.

Boosting business investment is also crucial, both to close the short-term growth gap and to strengthen the economy’s potential to withstand future shocks.

“Turning good intentions from a permanent investment deduction into a firm commitment, drawing up an infrastructure roadmap and publishing a digital strategy are steps that can be taken without delay.”

Chiara GiordanoMay 18, 2022 08:05

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Inflation reaches new record of 9 percent

Prices rose the fastest in more than 40 years in the 12 months to April, as households grapple with a sharp rise in energy bills.

Inflation climbed to a new all-time high of 9 percent last month, up from 7 percent in March, following a £700 increase in utility bills.

About three quarters of the general increase in inflation was due to higher energy bills.

Our economics editor Anna Isaac has the full story:

Chiara GiordanoMay 18, 2022 07:50

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Good morning and welcome to the independent‘s live report of the cost of living crisis.

Inflation has reached its highest level in 40 years, after rising to 9 percent in April, the Office for National Statistics announced today.

Stay tuned for rolling updates and responses.

Chiara GiordanoMay 18, 2022 07:48

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