According to data released by the Office for National Statistics on February 16, the UK consumer price index (CPI) rose by 5.5% year-on-year in January, setting a new record in nearly 30 years. The UK CPI has remained high for several months. The Bank of England, the central bank of England, said that inflation in the UK will continue to rise and may reach 7.25% in April this year.
Soaring prices continue to increase the burden on people's lives. According to survey data released by the British charity Food Foundation, in January this year, about 4.7 million adults in the UK experienced a "food crisis", which was 20.5% higher than the data in July last year. The foundation also pointed out that 1 in 5 British households had to pay for the necessary energy bills with the money saved by reducing the quantity and quality of food.
Vicky Lowe manages a charity in Newtown. She said that as food and energy prices continue to soar, the queues to receive free food have grown longer this year. "Half an hour before opening, people are already queuing. Many of the people who receive food are working, but they are increasingly feeling their wallets are tight." A report released by the public opinion polling company recently showed that more than 80% of the British people are concerned about energy costs and rising grocery prices, and more than 40% of respondents said that household financial conditions may deteriorate this year.
The UK National Institute for Economic and Social Research said recently that the main reason for this round of inflation is fuel and food prices. Grant Fitzner, chief economist at the Office for National Statistics, believes that rising prices for clothing and footwear are driving up inflation, and rising costs for some household goods and rents are also contributing to the trend. UK electricity and gas bills rose 18.8% and 28.1% year-on-year in December last year, the biggest increases since 2009. Food prices rose 4.2 percent year-on-year, the largest increase in eight years. Britain's energy market regulator announced earlier this month that energy price caps will rise by 54% from April, a policy that will affect about 22 million households and cost each British household an extra £693 a year for this alone.
The Bank of England said the disposable income of British households had been squeezed the most in 30 years, driven by high inflation, slowing economic growth, rising unemployment and higher tax rates. Household disposable income is expected to fall by 2% in 2022, followed by a further 0.5% decline in 2023.
The British government has introduced a combination of measures such as partial relief or delay in paying household energy bills, in order to ease the pressure on people's living costs. Martin Wolf, chief economic commentator of the British "Financial Times", wrote in an article that the relevant government measures are limited to ease the pressure on household energy expenditure, and no special measures have been introduced for low-income households with a high proportion of energy expenditure.
The Bank of England recently announced that it will raise its benchmark interest rate from 0.25% to 0.5%. Analysts believe that the Bank of England may raise interest rates again in the near future. Suren Thirou, head of economic research at the British Chamber of Commerce, said the Bank of England is seeking to control inflation, but rising energy costs and continued supply chain crises are the triggers for this round of high inflation, and interest rate hikes have limited effect.