Cost of Living Rising at Fastest Rate in 40 years

A big rise in inflation has come after energy bills soared in April but there is a warning that it may get worse. The cost of living is rising at fastest rate in 40 years as inflation hits 9%.

The new figures from the Office for National Statistics (ONS) – a significant rise from the already high figure of 7% in March – come after the increase in fuel prices most customers saw in April, but also include rising food prices and other household costs.

It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982. But there was a warning that the rate is likely to climb higher.

The figures will put more pressure on the Government to protect the poorest in society, with Labour and some business groups calling for an emergency Budget or other measures to help families. The influential Institute for Fiscal Studies estimates that the cost of living is rising for the poorest households by around 11% as they spend more of their income on energy and food.

Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect. 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. Steep annual rises in the cost of metals, chemicals and crude oil also continued, along with higher prices for goods leaving factory gates.

“This was driven by increases for food products, transport equipment and metals, machinery and equipment.”

Shadow chancellor Rachel Reeves said the rate of inflation hitting 9% in April would be “a huge worry for families already stretched. We can’t wait any longer for action from this out of touch government,” she said. “Today, Labour force a vote for an Emergency Budget and for a plan for growth. The Tories must back it.”

Suren Thiru, head of economics at the British Chambers of Commerce, said: “The jump in UK inflation in April is eye-watering and underscores the growing cost-of-living crisis facing households and the damaging squeeze on firms’ ability to invest and operate at full capacity.

“The marked acceleration in the headline rate in April reflected the continued upward pressure on prices from surging energy and commodity costs, as well as the energy price cap rise and the reversal of the VAT reduction for hospitality in the month. The scale at which inflation is damaging key drivers of UK output, including consumer spending and business investment, is unprecedented and means there is a real chance the UK will be in recession by the third quarter of the year.

“While inflation may moderate a little over the summer, April’s inflationary surge is likely be surpassed in October as the expected energy price cap rise in the month lifts inflation above 10%.”

Mr Thiru said a rise in interest rates in June was “inevitable” but the Government should reverse its recent rise in National Insurance rates and cut VAT on energy bills.

Chancellor Rishi Sunak said: “Countries around the world are dealing with rising inflation. Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.

“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action. We’re saving the average worker £330 a year through reducing National Insurance Contributions, changing Universal Credit to save over a million families around £1,000 a year, and providing millions of families with £350 each this year to help with their energy bills.”

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