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The UK Consumer Price Index (CPI) broke double digits for the first time since 1982, according to the Office for National Statistics (ONS). The increase, in part, responds to an increase in the price of food and fuel. In the midst of the situation, which could affect the country’s economic growth for this year, the Government has promised resources to serve those most in need.
In several countries around the world, inflation has become the main target to attack due to the impact it has on the population. In the United Kingdom, one day after announcing that the real salary –the one that results from deducting inflation from the nominal salary to determine the value of purchasing power–, the Consumer Price Index (CPI) registered an increase until reaching 10, 1% in the month of July at the annual rate.
The data, released on August 17, reveals a jump of 0.7 percentage points compared to the sixth month of the year and represents the worst record in the nation for 40 years when, in February 1982, it stood at 10, 4%
If the span of the last 70 years is taken into account, it is the fourth time that the nation has exceeded the 10% CPI threshold.
The announcement, made by the ONS, beat analysts’ estimates by four tenths of a percentage point; since they had announced a rise to 9.8% of inflation in the June-July period of this year.
One of the items that he pressed to push inflation to double digits was food. According to the report, there was an increase of 2.3% between June and July, being the highest monthly increase in the last 21 years.
“Food prices rose markedly, particularly bakery products, dairy products, meats and vegetables,” said Grant Fitzner, chief economist at the ONS.
However, for another group of experts “the worst is yet to come” since the Bank of England indicated that an increase in the price of gas for the month of October is possible, which added to the current crisis could push the United Kingdom to a prolonged recession.
The panorama, which is presented in the midst of the race for the election of a new prime minister, has led the authorities of the Bank of England to raise the interest rate by half a base point to reach 1.75% at the beginning of July, the highest rate since the 2008 global financial crisis.
“We expect another 50 basis point rate hike in September and we don’t rule out another rate hike in November,” James Smith, a developed markets economist at ING Economics, told the AP news agency.
Government will maintain the aid (for the moment)
Inflation is a problem that is currently occurring, among other things, as a consequence of the war in Ukraine, which has caused an increase in energy prices due to the character of Russia as one of the main exporters of oil and gas, and supply chain issues that existed at the beginning of the year.
The 10.1% inflation is perceived as a setback and an additional problem for the Central Bank in its task of bringing inflation down to its 2% target.
For the moment, the British Government has announced plans to help the most vulnerable, the population most affected by the increase in food and energy prices. In this sense, an aid package valued at 37,000 million pounds sterling (just over 44,500 million dollars) was announced, which establishes additional payments for those with low incomes and a 400-pound discount on energy bills for all in the coming months. .
“I understand that times are difficult and people are concerned about the price increases that countries around the world are facing (…) Controlling inflation is my top priority and we are taking action through strong and independent monetary policy, decisions tax, responsible spending, and reforms to boost productivity,” explained the Chancellor of the Treasury, Nadhim Zahawi.
Sharon Graham, general secretary of Unite, one of Britain’s leading trade unions, said inflation had reached “dangerous new levels” for workers and their families while blaming companies.
“Real wages have fallen to the lowest level on record, so if today’s figures show anything, it is that wages are not driving inflation (…) Since the pandemic, the top 350 companies listed on the FTSE (the benchmark stock index of the London Stock Exchange) have seen their profits rise by 43%. UK has a speculation crisis: when will something be done about it?
With AP, Reuters, EFE and British media
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