UK inflation hits 30-year high
Inflation in the UK hit an annual rate of 5.4% in December, official data cited by Reuters shows. The indicator reached its highest point since March 1992, jumping from 5.1% in November, which was already a decade high.
On a monthly basis, consumer prices soared 0.5%, outpacing economist projections by 0.2%. Analysts attribute the growth to soaring energy costs, booming demand, supply chain troubles, and labor market issues.
November’s figures resulted in the Bank of England’s decision to hike the interest rate by 15 basis points to 0.25% last month. The regulator is scheduled to meet next on February 3. Paul Craig, portfolio manager at Quilter Investors, told Reuters that another interest rate hike is possible.
“The MPC (Monetary Policy Committee) will be faced with a difficult trade-off between ensuring financial stability or helping households cope with a cost-of-living crisis that is set to squeeze household finances over a difficult winter period,” Craig was cited as saying.
He added that not only has the cost of living increased, but “so [has] the cost of going to work, and wage increases may not be enough to cover the cost of returning to normality.”
The Consumer Prices Index grew by 4.8% in the 12 months to December 2021, reaching its highest since 2008, according to the UK’s Office for National Statistics. Housing, household services, and transport showed the largest increases.
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