Britain’s inflation hits 40-year high as food prices soar – National

UK food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high and putting pressure on the beleaguered government to balance the books without draining aid to the poorest residents of the country.

Food prices jumped 14.6% in the year to September, driven by soaring prices for staples such as meat, bread, milk and eggs, it said on Wednesday. the Office for National Statistics. This brought consumer price inflation down to 10.1%, the highest level since early 1982 and equal to the level last seen in July.

The figures immediately fueled demands that the government do more to help families and pensioners as it struggles to regain credibility after an unfortunate package of tax cuts rattled financial markets. Treasury leader Jeremy Hunt scrapped the package after taking office last week, but warned that this winter will be tough and spending cuts will also be needed.

Glenn Sanderson, principal of St. Aidan’s Catholic Academy in Sunderland, said schools across the country were struggling to feed needy children, with many diverting money from textbooks and classroom instruction to subsidize meal programs. The suggestion of government budget cuts in this environment is « appalling », he said.

« Parents…have to make tough decisions – do they pay for the bus fare to send their child to school or do they use that money to feed their child, » Sanderson told the BBC. « In today’s society, I find this completely unacceptable. »

Hunt told the House of Commons this week that the government would « prioritize helping the most vulnerable while ensuring broader economic stability ». But he also backed away from Prime Minister Liz Truss’ earlier pledge to raise pensions in line with inflation.

Downing Street spokesman Max Blain said « no decision has been made » on pension guarantees.

“We are very aware of the number of vulnerable pensioners,” but the government is “not making any commitments in any particular policy area at this stage,” he said.

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Canadians are feeling the financial pinch of inflation

Russia’s invasion of Ukraine has driven up food and energy prices around the world, with shipments of natural gas, grain and cooking oil halted. This came on top of price increases that began last year as the global economy began to recover from the COVID-19 pandemic.

As soaring food prices weighed on Britain’s biggest household budget last month, prices are rising across the board. Transportation costs jumped 10.9%, furniture and household goods rose 10.8%, and clothing rose 8.4%. Housing costs increased by 9.3%, driven by higher energy prices.

The government has sought to protect consumers from the impact of rising energy prices by capping the cost of electricity and natural gas. But Hunt has now limited the price cap to six months, instead of the originally promised two years.

That means inflation is likely to stay higher for longer than expected, said Jack Leslie, senior economist at the Resolution Foundation, a think tank that focuses on improving living standards for low- and middle-income people.

“This bleak outlook means that family incomes will continue to fall sharply next year, especially as support for energy bills is removed,” Leslie said in a statement. « This is the background to debates in government over whether past commitments to increase benefits or price-based pensions should be the next announced U-turn. »

Faster inflation is also fueling expectations that the Bank of England will raise interest rates ever faster as it strives to bring inflation back to its 2% target.

The central bank is trying to slow inflation without tipping Britain into recession. Britain’s economy shrank around 0.3% in August after growing just 0.1% in July, according to ONS figures.

« Today’s higher-than-expected inflation reading sets the stage for another aggressive interest rate hike by the Bank of England at its next meeting in early November, » said Victoria Scholar, chief financial officer. investments at Interactive Investor. « However, the central bank is between a rock and a hard place as it seeks to rein in price pressures without inadvertently adding to recession risk. »

It’s the same calculation being made in other countries, but the US Federal Reserve has signaled that it will continue its rapid rate hikes to fight inflation which is at 8.3%, a decades high. .

The European Central Bank, at its meeting next week, is expected to make another big hike to reduce record inflation in the 19 countries that use the euro. The EU’s statistics agency, Eurostat, on Wednesday adjusted eurozone inflation for September down slightly to 9.9%.

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