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In October, the UK had its highest level of inflation in 41 years. As a result, households feel pressure from rising energy, transportation, and food expenses.
Statistics indicate that the nation’s inflation grew by 11.1%, which caused weariness in several businesses. According to economists, the consumer price index will rise by 10.7% year over year. At 10.1%, September’s gain was nearly the same.
The newly-installed Prime Minister Rishi Sunak implemented the Energy Price Guarantee Program. The government will assist individuals, families, and companies in reducing their gas and energy costs as part of the initiative. The government initiative, though, must catch up with inflation.
“Indicative modeled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%,” said the Office for National Statistics.
The cost of living surged by 11.7% from September 2022 to the same month last year, an increase of 9.3%.
“In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago. Domestic gas prices have seen the largest increase. With prices in October 2022 being more than double the price a year earlier,” the ONS added.
Worsening inflation in the UK
Prices for food and other beverages rose by 16.4% in the year before to October. Since September 1997, the commodity had the biggest increase at this time. According to the Bank of England, the current recession in the UK is the longest on record. The government and central bank are now negotiating to come up with a strategy to support the nation’s population and economy. Their objective is to prevent inflation from growing worse.
JP Morgan Asset Management’s Mike Bell disputed the central bank’s decision to “modestly” raise interest rates in light of the inflation. Bell contends that the rates the Bank of England now uses may need revision to control inflation and finally drop back to the 2% objective.
“We are not so convinced. What has been underestimated consistently has been the inflationary pressures stemming from the tight labor market,” he said.
“Although vacancies and employment eased marginally in yesterday’s labor market report, wage growth continued to push higher. With headline inflation expected to stay elevated for some months yet, workers may still ask for more pay to protect disposable income,” Bell added.
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A financial statement from the government
This Thursday, the finance minister, Jeremy Hunt will present the country’s new fiscal statement. The announcement will outline the UK’s financial situation and the government’s strategies for resolving these problems. Sources claim that the announcement will entail freezing tax exemptions and rates.
“While anything is possible tomorrow, if the government opts to rely on continuing high levels of inflation as expected, it would likely be a safe bet. “The dip in inflation seen back in August looks to have been a fluke, and it is unlikely that a fall in inflation will materialize any time soon,” said Quilter financial expert Rachael Griffin.
