UK inflation sees record jump to 9%

CPI inflation rose by 9.0% in the 12 months to April, up from 7.0% in March, according to the latest ONS data.

Related topics:  Finance News
Rozi Jones
18th May 2022
high street banks
"April brought the biggest jump in the inflation rate on record and officials now believe prices have not risen this quickly for forty years."

On a monthly basis, CPI rose by 2.5% in April 2022, compared with a rise of 0.6% in April 2021.

April's increase is the biggest monthly jump on record and inflation is now at a 40-year high.

CPIH inflation, which includes owner occupiers' housing costs, rose by 7.8% in the 12 months to April 2022, up from 6.2% in March.

The largest upward contributions to the annual inflation rate came from housing and household services (2.76 percentage points, principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport (1.47 percentage points, largely from motor fuels and second-hand cars).

Ed Monk, associate director of personal investing at Fidelity International, commented: “April brought the biggest jump in the inflation rate on record and officials now believe prices have not risen this quickly for forty years. Today’s figures show the impact of the energy price cap rise, taking inflation to 9% - a rate that will feel completely alien to most households and pile yet more pressure on already stretched budgets. And, unfortunately, this is unlikely to be the end of price rises. Bank of England governor, Andrew Bailey, warned this week of food price hikes coming down the track and said the central bank is unable to stop inflation hitting double digits later this year.

“With wage data showing salaries rising at 4.2%, UK households are feeling themselves getting poorer by the month as prices surge ahead of pay. They will be cutting back on non-essential purchases and many will struggle to find the money needed to keep up with the expense of everyday life. That, of course, adds to the risk of growth slowing, and even of recession this year.

“The Bank of England is stuck for now. Interest rate rises will surely continue to bring down medium-term forecasts for inflation, but that only takes more steam from the economy.”

Rachel Winter, partner at Killik & Co, said: “UK inflation has hit 9%, surging ahead of last month’s 30-year high of 7%.

“These are the first figures to include the huge jump in the consumer energy price cap, and they put the spotlight on the government to draw up a long-term plan to tackle the cost-of-living crisis.

“Many households are struggling to stay afloat as they face the biggest squeeze on consumer finances since the 1970s. With the economic outlook increasingly gloomy, the prospect of a recession is becoming more real. Arguably, the stock market has already priced in this risk.

“While we navigate a volatile market, it’s important to inflation-proof our savings. Investing is one way to accomplish this. Consumers should look to products such as stocks and shares ISAs to give them a better chance of achieving above-inflation returns.”

Richard Carter, head of fixed interest research at Quilter Cheviot, added: “Just days after Andrew Bailey and the Bank of England warned of ‘apocalyptic’ food prices, inflation has surged to an eyewatering 9% in April, delivering another hammer blow to households already fretting about the cost of living. The rise comes as a result of a sharp rise in household utility bills during the month and there are continued warnings that the worst is to come.

“Unlike in the US, UK inflation continues to rise for the time being, stoking further fears around the cost of living. It will also add to the pressure on the Bank of England to increase interest rates and get to grips with soaring prices even if, as they admit themselves, many of the factors driving inflation are beyond their control. Indeed, we should not be surprised to see further pressure mount on the government soon to pull some fiscal levers and look to alleviate the pain on households come the Autumn.

“If there is one crumb of comfort today, it’s that many forecasters expect this to be close to the peak in the rate of CPI. So while high inflation will remain present for some time, we should hopefully see the beginning of the end of this painful inflation journey soon."

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