UK inflation surges to 40-year high of 9% in April, as soaring energy and food prices deepen cost-of-living crisis

In April, consumer prices across the UK economy surged by the most in 40 years, as rising energy and food bills deepened a cost-of-living crisis that threatens to plunge the country into recession later this year.

The Office for National Statistics said consumer price index inflation hit 9% in April, up from 7% in March. The reading was below expectations, but still showed inflation running at its hottest since 1982.

The bulk of the increase came from a sharp rise in utility bills, after the government lifted a price cap in light of how much wholesale energy prices have risen.

The 12-month inflation rate for gas was 95.5%, while for electricity it was 53.5%.

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

The Bank of England is forecasting a rise in consumer inflation to 10% later this year, five times higher than its target rate, which could cause the UK economy to go into recession.

BoE Governor Andrew Bailey told lawmakers on Monday that the central bank was powerless in the face of the increase in inflation. He warned of an apocalyptic risk from soaring food prices.

Bailey told the Treasury Select Committee that a big income shock from the increase in the global prices of goods would hit demand in the economy and push up employment.

Andrew Bailey will be happy to see April's data come in no worse than expected, although the headline number is quite terrifying and shows just how fast the rate has accelerated.

The Chancellor will be weighing up what he can do to help out the consumer, as it is clear the Bank of England has to react forcefully.

The government raised taxes in April to make up for the increase in spending.

The BoE hiked interest rates to 1% from 0.75% in a bid to stem inflation. Wednesday's data suggested it may have to raise rates even more aggressively.

The pound fell against the dollar and the euro after the data release.

Even allowing for Bank of England governor Andrew Bailey's rather ham-fisted attempts to caution against sharp rises in wages, markets are now pricing in that the Bank of England will have to raise rates much faster than it would like.

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