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Expected double-digit rate: UK inflation hits 40-year high

Expected double-digit rate
British inflation at its 40-year high

Consumers in the UK are groaning from high inflation. Prices rose again in May. The central bank is resisting development, which could become a political problem for Prime Minister Johnson. Because one in four Britons start skipping meals.

Consumer prices in the UK rose at the highest rate since 1982 through May. Goods and services cost on average 9.1% more than the previous year, according to the Office for National Statistics in London. Economists expected this after inflation had already hit 9.0 percent in April. Rising food prices, in particular, pushed inflation higher this time: at 8.7%, they have risen more than they had in over 13 years.

Experts see the risk of persistently high inflation coupled with a simultaneous recession, triggered not only by high energy prices, but also by the continuing problems of Brexit. These could further influence trade relations with the EU. “With the economic outlook so unclear, no one knows how much inflation could rise and how long it will last, which makes it particularly difficult to assess fiscal and monetary policy,” said economist Jack Leslie of the Institute Resolution Foundation.

“We are using all the tools at our disposal to reduce inflation and combat rising prices,” said Finance Minister Rishi Sunak. “We can build a stronger economy through independent monetary policies, responsible fiscal policies that do not increase inflationary pressures and by increasing our long-term productivity and growth.”

Last week, the Bank of England raised interest rates for the fifth time in seven months in order to ease the pressure on prices. It is now at 1.25%. This should bring the inflation rate back to the 2 per cent target set by monetary watchdogs over the medium term and on a sustainable basis. However, the central bank expects prices to continue rising for the time being: for October, for example, an inflation rate of 11 percent is expected.

According to a survey by the Ipsos institute, the rapid increase in the cost of living is hitting the citizens of the island hard: according to this, two out of three Brits are turning off the heating to save costs. More than a quarter of respondents even said they skip meals due to their limited budgets. This situation is increasing popular dissatisfaction with the government of Conservative Prime Minister Boris Johnson. At the same time, demands are made to increase social assistance in order to relieve the poorest sections of the population due to the rapidly rising cost of living.

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