UK inflation jumps to 40-year high of 9% as food and energy prices spiral

A customer pays for his fruit and vegetables with a ten pound sterling note, at a trader’s market stall in London on May 12, 2022. - Britain’s economy shrank in March on fallout from soaring inflation, increasing the prospect of the country falling into recession. Official first-quarter data on Thursday showed that following solid output in January, the UK economy posted zero growth the following month and contracted by 0.1 percent in March. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)

The UK's cost of living crisis worsened in April as the country's inflation soared to a 40-year high of 9%.

Consumer prices rose by 2.5% month-on-month, slightly below expectations for a 2.6% climb in a poll of economists, which had projected a 9.1% annual increase.

The 9% rise in the consumer price index is the highest since records began in 1989 and surpasses the 8.4% annual rise posted in March 1992 and the 7% seen in March of this year.

The Office for National Statistics has recently published modelledCPI data on an indicative basis for earlier periods, and said its new estimates suggest that inflation would last have been higher around 1982.

The U.K. energy regulator increased the household energy price cap by over 50% on April 1. Ofgem has not ruled out further increases to the cap this year.

The cost of borrowing from the Bank of England has risen to a 13-year high of 1% after it hiked interest rates four times in a row.

A quarter of Britons have stopped eating meals because of inflation and a food crisis, according to the Bank of England.

There are warnings that the worst is yet to come, as Wednesday's mammoth inflation print delivers another blow to households already worried about the cost of living.

Richard Carter, head of fixed interest research at Quilter Cheviot, said that inflation in the U.K. continues to rise for the time being, stoking further fears about the cost of living.

It will add to the pressure on the Bank of England to increase interest rates and get to grips with soaring prices even if many of the factors driving inflation are beyond their control.

Carter suggested that the British government should look to alleviate the pain on households by pulling fiscal levers.

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