Inflation soars to 40-year high following rise in food prices

The cost of living in the UK has increased at its fastest rate for 40 years following soaring energy bills, petrol prices and an increase in food prices.

According to the Office for National Statistics (ONS), Consumer Prices Index inflation increased to 9% in the year to April, up from an already high 7% in March.

The ONS estimates this is the highest measured rate since 1982.

Food and non-alcoholic beverages also contributed 0.61 percentage points to the annual rate, with prices growing 6.7% on the year, as the war in Ukraine has also hit global supplies.

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“Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect,” ONS chief economist Grant Fitzner said.

“Around three-quarters of the increase in the annual rate this month came from utility bills.

“We have also published new modelled historical estimates today which show that CPI annual inflation was last higher 40 years ago.”

Agreeing with Fitzner, chancellor Rishi Sunak said that inflation is hitting countries around the world, blaming energy prices as the main reason.

He said: “We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.”

Eric Hazan, senior partner at McKinsey & Company also commented on the figures, saying: “Economic pessimism is at an all-time high amid rising costs. Six in ten (60%) UK consumers say their biggest concern right now are rising prices.

“Nearly 35% of UK consumers said they believe the economy will show regression or fall into a lengthy recession.”

The Food and Drink Federation’s CEO Karen Betts said the figures are “very sobering” with food and non-alcoholic drinks prices rising by 6.7%, “slightly more than food manufacturers’ had feared”.

Betts added: “This is a very worrying time for many households, and food and drink businesses are continuing to do everything they can to contain food-price inflation. However, the pressures on both large and small businesses are immense.

“Ingredient price rises have been relentless for more than a year now, as a result of pressures in the global supply chain caused by the Covid-19 pandemic.

“The war in Ukraine, with both Ukraine and Russia important suppliers of commodities like wheat and food oils, as well as energy and fertiliser, has made the situation worse.

“Our sector is, in particular, impacted by the significant rises in energy costs seen this year – with over 60% of food and drink manufacturers reporting energy price rises are impacting their operations. Meanwhile, wages are rising too with labour shortages right across our sector taking hold.”

Commenting further on the news, shadow chancellor Rachel Reeves said that the news was “a huge worry for families already stretched”.

“We can’t wait any longer for action from this out-of-touch government,” she said.

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