LONDON (BLOOMBERG) - Inflation in Britain surged to 7 per cent last month, a fresh three-decade high that worsens a cost-of-living crisis threatening to derail the nation's economic recovery.
Britain is the teeth of an inflationary surge that has lifted the consumer price index from less than 1 per cent a year ago. The scale of the crisis will become even more striking this month, when a 54 per cent rise in the energy price cap kicks in. Prices rose 1.1 per cent in March alone, the biggest increase for that month on record.
The figures out on Wednesday (April 13) add to pressure on the Bank of England (BOE) and Treasury to act on containing inflation and protect consumers from the worst deterioration in their spending power on record. The central bank expects inflation to reach around 8 per cent when April's reading is announced, with the risk of a double-digit reading later this year.
Economists and charities united in calling on Chancellor of the Exchequer Rishi Sunak to do more to help households struggling to make ends meet, saying his latest aid package will not help many of the families on the lowest incomes.
March's reading is the last before the BOE's next rate decision on May 5, when it also will update its forecasts. It marks the sixth straight month that the reading has exceeded the estimates of economists.
"Britain's cost-of-living crisis - on track to being the biggest squeeze since the mid-70s - will continue to worsen before it starts to ease at some point next year," said senior economist Jack Leslie at the Resolution Foundation, a research group campaigning against poverty. "The sheer scale of this inflation-led squeeze on living standards makes it all the more remarkable how little support the Chancellor provided in his spring statement."
In a statement on Wednesday, Mr Sunak said "we're seeing rising costs caused by global pressures in our supply chains and energy markets which could be exacerbated further by Russian aggression in Ukraine. I know this is a worrying time for many families, which is why we are taking action to ease the burdens".
The gains were driven by a broad increase in prices across the economy, including fuel, metals and used cars. The cost of restaurant meals, hotels, furniture, clothing and shoes also made upward contributions.
"The data tells a story of what millions are currently living - steeper bills on everything from petrol to food and fuel, and less left over at the end of each month to put towards their future," said Mr Colin Dyer, client director at fund manager Abrdn.
Britian is not the only one grappling with faster inflation. Data on Tuesday showed US consumer prices rose 8.5 per cent in March, the biggest increase since late 1981.
There was also strong evidence of inflationary pressures building at the wholesale level. Producer prices rose 11.9 per cent from a year ago, the most since 2008. Raw material costs surged 19.2 per cent, the biggest increase since those records began in 1997.
The price of goods leaving British factories has continued to rise substantially with metal and transport products both at record highs and food reaching its highest rate for more than a decade.
That's hurting British retailers, as well as households, with supermarket giant Tesco warning on Wednesday that profit may decline this year as it battles to keep prices low for consumers.
"Retailers are trying to help consumers by expanding their value ranges and doing all they can to keep the price of essentials down," said Ms Helen Dickinson, chief executive officer of the British Retail Consortium.
