UK inflation hits 9%, the highest reading in over 40 years

Inflation is likely becoming entrenched with food, drinks, hotel and restaurant prices showing sharp increases.

18 May 2022

UK inflation certainly sees no sign of slowing down, recording a 9% increase in April year-on-year. This is the highest reading in over 40 years. CPI rising to 9% in April from 7% in March is almost exclusively down to the surge in fuel prices as energy price caps were lifted by the government and the global energy market ratcheted higher following Russia’s invasion of Ukraine. Inflation has taken firm roots in the UK economy and is likely becoming entrenched with food, drinks, hotel and restaurant prices showing sharp increases. On the producer price front, factory gate prices rose 14% in April, with input prices rising at a record 18.6%. The Brexit six-year-old hangover continues. You could almost forgive Bank of England (BoE) Governor Andrew Bailey for pleading with employers not to raise wages following yesterday’s employment numbers – fears that a wage growth spiral higher will keep inflation beyond its control is spot on. But arguably the BoE allowed inflation expectations to skyrocket with its now debunked ‘transient’ narrative last year, so it seems it is now reaping what it is did not sow. Tough times ahead for the UK.