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The pressure falls on citizens, who will have to deal with a high cost of living, and the Central Bank, which will have to readjust interest rates for February and thus curb the inflationary trend.
A number that does not stop. In the UK, the year-on-year rate of inflation hit 5.4% in December from 5.1% in November, making it the highest since March 1992, according to the Office for National Statistics (ONS).
But the number will continue to grow. In April, when regulated household energy bills increase by around 50%, inflation could be between 6 and 7% according to experts, when the Bank of England’s goal is to keep it at 2%.
“The Bank of England was already uncomfortable with its monetary policy. Today’s surprises to the upside, both in headline and core inflation data, will certainly not have helped,” said Ambrose Crofton, global markets strategist at JP Morgan Asset Management.
This increase is motivated by common problems in the region. A global rise in energy prices and supply chain difficulties. According to officials from the Bureau of Statistics, the new variant of coronavirus Omicron did not have a significant impact on the inflation data.
Grant Fitzner, chief economist at the ONS, said that “food prices went up a lot, while increases in furniture and clothing also pushed up inflation.”
Now the pressure is on citizens due to the high cost of living and on the Central Bank, which last month became the first major bank in the world to tighten its policy since the start of the pandemic to increase interest rates. .
Experts say there is a 90% chance that the Bank of England will raise its main interest rate to 0.5% on February 3rd. Meanwhile, two-year UK government bond yields, sensitive to financial markets’ interest rate expectations, fell within a stride of their highest level since 2011.
The UK remains concerned that labor shortages and wage pressures mean that inflation is not temporary.
“I understand the pressures people face with the cost of living and we will continue to listen to people’s concerns,” Economy Minister Rishi Sunak reacted.
Retail price inflation, a measure used by the government and businesses, rose to a 30-year high of 7.5% from 7.1%.
With Reuters and EFE
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