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The cost of living crisis in the UK has increased this week, with a series of data releases showing how the economy is struggling.
Bank of England Governor Andrew Bailey made headlines with his prediction that a surge in food costs could have consequences for the poor in society, while breakfast TV shows devoted huge sections to discussing the issue.
Economic reports showed how bad things are. The Consumer Price Index hit a 40-year high of 9% in April. The consumer reached its lowest point in almost five decades, beating the financial crisis, the pandemic and even the grim days of the 1970s.
The bleakness of the current situation was hammered home by the data. Prime Minister Boris Johnson's government said there was little chance of more help for consumers.
In his main intervention of the week, the Chancellor of the Exchequer said he was worried that extra government spending to help people handle higher bills would cause inflation to go up. He said that he wants to cut business taxes to clear up long-term structural problems in the economy. There was talk of a windfall tax on oil companies.
Politicians said that Bailey should have moved quicker in fighting inflation. The Treasury has the tools to help, according to Huw Pill.
The charts show the story of a bad week for the UK economy.
The UK recorded its fastest inflation rate in 40 years.
Office for National Statistics
Consumer prices increased 9% in the year through April, the fastest rate since 1982. The jump in energy prices in March came from a surge in wholesale markets that caused consumer bills to increase in April.
UK inflation has gone up since the Thatcher Era.
Living standards are falling at a faster rate than in the past.
Office for National Statistics
The surge in prices means that UK workers, who have waited a long time for significant pay gains, are now seeing their best increases in years.
Wages rose 4.2% in the first quarter, double the average over the last decade, but pay adjusted for price gains fell. The decline in March from a year earlier was the biggest in three years.
The cost of living in the UK has increased due to the drop in real wages.
Britons are more pessimistic than at any time in the last half century.
GfK.
Consumers are feeling pain against that backdrop. The market researcher GfK said its closely watched measure of sentiment fell 2 points to minus 40 this month, the least since records began in 1974.
Shoppers are responding by spending less on big ticket items, and also trying to save money by socializing at home, leading to a surprise jump in April retail sales that may have overstated the strength of UK consumers.
Consumer confidence in the UK has fallen to its lowest level since the 1970s.
The U.K. workforce has fallen due to inflation.
Office for National Statistics
The UK workforce has shrunk. Almost half a million people have been listed as inactive since the Pandemic. The workforce is 2% more than before Covid hit, which will drag down output and tax payments to the Treasury. It makes it hard for employers to fill jobs.
Britain's workforce Shrinks Despite a Surge in Wages and Bonuses.
As the incomes squeeze hits demand, the unemployment rate is expected to rise.
The Office for National Statistics is part of the Bank of England.
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Unemployment in the UK fell to 3.7% this week, the lowest rate in over forty years. There were a new record of job vacancies.
The metrics may soon feel the heat from the crisis. The unemployment rate is expected to rise at the end of the year as employers respond to a sharp slowdown in demand.
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