UK inflation spirals to 40-year high as food and energy prices surges, pound falls
British pound fell against the US dollar on Wednesday after data showed inflation in the UK rose to 9%, the highest level in 40 years
• UK’s CPI hit 9% in April, highest since 1982, fuelling recession fear
• One in four Britons skipping meals over rising cost of living
The British pound fell against the US dollar on Wednesday after data showed inflation in the UK rose to 9%, the highest level in 40 years.
At 5 am ET, or 9 am GMT, sterling dropped 0.9% against the US dollar at $1.2374, reversing most of the gains made on Tuesday.
Although robust labor market data had increased expectations that the Bank of England would have to raise its interest rates further, the latest inflation data have fueled fear that the looming threat of recession may temper how far the central bank can go.
UK’s consumer price inflation (CPI) hit 9% in April, the highest since records began in their current form in 1989, affected mainly by surging food and energy prices.
The Office for National Statistics in Britain also said its estimates suggest that inflation would have last been higher “sometime around 1982.”
Also, the inflation rate is the highest among Europe’s five biggest economies.
British news outlet Sky News on Tuesday published a survey, which showed that a quarter of Britons are skipping meals as inflationary pressures and a food crisis are creating what Bank of England Governor Andrew Bailey has dubbed an “apocalyptic” outlook for consumers.
Consumer prices rose by 2.5% month-on-month, fractionally below experts’ consensus of a 2.6% climb.
Against the euro, the pound was up 0.7% at 84.08 pence.
Picture Credit: CNBC
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