The Bank of England is watching UK inflation carefully, and the latest official figures show that inflation slowed in April by less than expected to 8.7%.
Britain’s ‘core inflation’ – a measure which doesn’t include volatile components such as energy and food – is the highest of the G7 countries at 6.8% and is going in the wrong direction.
Nationwide building society has warned that rises in mortgage interest rates – closely tied to increases in the Bank of England’s rate that has been raised to try and control inflation – could hit the housing market.
So why is inflation in the UK so stubborn compared to similar countries? Newsnight’s Economics Editor Ben Chu reports.
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Why does Britain have the worst inflation in the G7?
In recent times, Britain has found itself in an uncomfortable position within the G7, as it is currently experiencing the highest inflation rate among its peers. This predicament has led many to question the reasons behind this phenomenon and its implications for the country’s economy. To shed light on this issue, the popular news program “Newsnight” on the BBC conducted a comprehensive analysis, emphasizing several factors that contribute to Britain’s high inflation rate.
Firstly, one of the key reasons for the alarming inflation rate is the global surge in commodity prices, most notably energy costs. With their substantial reliance on fossil fuels, the spike in oil prices has significantly impacted the British economy, causing a ripple effect on various sectors. This increase in energy costs has inevitably trickled down to consumers, who now face higher prices for goods and services across the board.
Secondly, Brexit’s impact on the economy cannot be overlooked. The process of exiting the European Union has introduced considerable uncertainty and volatility into the British market, leading to fluctuations in the pound’s value. This has resulted in increased prices for imported goods, further exacerbating inflationary pressures. The ongoing disruptions in supply chains and trade relations have created further challenges for businesses, leading to increased input costs that ultimately translate into higher prices for consumers.
A third factor contributing to Britain’s high inflation rate is the ongoing labor market challenges. The Covid-19 pandemic has caused a significant disruption in the workforce, leading to shortages in various industries. As a result, the scarcity of available workers has driven up wages, with many companies struggling to fill vacancies. This upward pressure on wages has subsequently translated into higher costs for businesses, which inevitably find their way into consumers’ pockets through increased prices.
Additionally, the government’s response to the pandemic has contributed to Britain’s high inflation rate. In an attempt to support the economy during the crisis, extensive measures were put in place, including fiscal stimulus packages and monetary easing. While these initiatives provided much-needed relief, they also stimulated demand, which, combined with supply disruptions, led to price increases. The unprecedented nature of the pandemic made it challenging to accurately navigate through the economic landscape, and the resulting inflationary pressures were an unintended consequence of the government’s efforts.
Finally, the Bank of England’s response to inflation has also influenced the current situation. Concerned about rising inflation rates, the bank opted to gradually reduce the amount of monetary stimulus provided to the economy. This decision, while aimed at curbing inflation, also introduced potential uncertainties into the market, as investors speculated about the potential impacts of tighter monetary policy on the economy.
In conclusion, the factors contributing to Britain’s high inflation rate within the G7 are diverse and interconnected. Global commodity prices, Brexit-related uncertainties, labor market challenges, government stimulus measures, and the Bank of England’s response to inflation collectively intertwine to create the unique situation. While the government and central bank continue to monitor the situation and explore potential solutions, it remains to be seen how long Britain will bear the burden of the worst inflation among its G7 counterparts.
I find it interesting why everyone gets so concerned about recession and inflation statistics. Inflation has been a constant presence, and individuals have historically turned to investments as a way to outpace it. For instance, stock market returns consistently surpass inflation. I recently heard about someone who invested $121,000 last October and has since grown their portfolio by over $400,000. I'm seeking recommendations that can help me achieve similar returns.
Increase 10% tax more
Rapist police. Pedofilic culture cose in arabia that is punished severely. Only the west rapes children. In effect uk foul.
Look at soho prostitution same houses every year. Same place. Yet although ilegal never disturbed.
Boycott shady england or b part n parcel to this disasterous situation.
Boycott uk now
Wholesale energy prices today vs September last year:
Gas: 88p/thm vs 640p last year: a fall of 86%!
Electricity: £82/MWh vs £580 last year: a fall of 86%!
Retail prices have fallen a piddling 15%, standing charges have barely budged!
Cons are allowing donor friends in energy companies to continue lining their pockets at the expense of millions of struggling families.
Cons are conning the British public! And the media are complicit in their deception.
increased debt and imf predictions, insurance market and pound against the dollar ratings. euro and german market is seperate issue now with Ukraine conflict, G7 needs to be take more seriously.
Why does the UK have the worst inflation in the G7? Because, uniquely within the G7, we chose to handicap our economy with Brexit.
UK inflation would be even worse if the Govt hadn't repeatedly delayed measures required by Brexit that are inherently inflationary e.g. post Brexit import checks on foodstuffs that arrive in the UK from the EU.
Inflation is supposed to be slowing. Many of my typical living costs, very recently, increased in price.
Government was warned about this outcome in 2020 when they stopped people moving around, spending and printed money like it was going out of fashion to keep people on furlough, which was totally unnecessary. More money in the system, less goods and services = inflation. All those who complied and revelled in being paid to stay at home should not complain. They got what they wanted. This was the biggest wealth transfer in history.
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid crisis, and even pull it off easily in a favourable economy. Unequivocally, the bubble/collapse is getting somebody somewhere rich
Price rises and inflation are a global problem, but the UK has had it longer and worse than most. The UK is the 4th worse off, since Greece was economically ruined in the Credit Crunch, and Ukraine is fighting for it's life as we speak, to great cost to both themselves and Russia.
We all know the UK goverment is corrupt and full of people loyal to fat cats and oligarchs. The elections were rigged ever since David Cameron resigned. Now starvation grows and the goverment smirks, accusing the victims of being excess population that deserves to die off. The UK is going the evil way Putin's Russia went.
اخرجوا من بلادنا أيها حثالة العرب.
مستخدمي YouTube الأغبياء أمثاله الذين أغرقوا تلك المنصة بمقاطع فيديو مروعة لا تُظهر سوى أسوأ ما في بلد بألقاب مزيفة لكسب المال. دمر يوتيوب.
They printed billions after billions in 2019/21.
They even printed money to pay people to go out and eat.
UK is a country of morons.
Britain needs a strategic energy policy.
Energy is the main culprit causing inflation.
More nuclear power plants need to be built. After the initial building cost, nuclear is a cheap renewable energy source.
Because it has the least competent Central Bankers, politicians and Civil Servants, way too much waste and way too much debt, as well as having had absurd Covid policies.
why ? because britain hosts the freemasonic City of London Crown Corporation where the Babylonian Money Magick is done
It’s all a bunch of bullshit and it doesn’t take 6 mins to explain that they’re trying to get more control over us
Why do they keep raising the price, because they can
My dogs are on a skin allergy sensitive kibble, i was buying an 8 pound bag from the vets for 90 dollars prior to covid, I switched to an equivalent one i found at a pet store with limited ingredients, there a 13 pound bag was 56.99, huge savings, now the price has jumped to 69.99. I could just imagine what the vet food would cost me now.
Canada has awful inflation woes but the UK really takes the cake on that one. In the US i found the food prices to be higher then what we have in Canada, never seen anything like it in my life, that was a shock, used to pop on over stateside for cheaper fuel and food, now with the exchange rate and the higher prices in America its not worth it.
Thank you Brexit.
UK was very lucky having built up 50% of natural gas reservoirs before EU sanctions on Russia as well as a mild winter. Coming winter may not be so unusually mild and now there's zero cheap Russian gas. Natural gas prices could easily go ballistic this winter.
With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly—which means more red ink for portfolios this quarter. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my £125k bond/stocck portfolio
I’m sick of seeing reports like this, some economist throwing out big words and complex abstract reasons as to why we’re all worse off.
It’s corporate greed. Banks, Supermarkets, Energy suppliers and Housing Giants are all fixing prices to ‘protect their margins’ and we are all suffering because of it. War/Brexit/Covid have very little to do with this wave of high interest rates. It’s greed and I’m fed up of living in a country where people are too flaccid to fight back .
All of that ridiculous parading and pomp for the coronation, and then the king’s birthday… seems like a really great idea right now doesn’t it??
Brexit. Literally everyone knows why but no one in the mainstream has the balls to just call it how it is. May have something to do with us cutting ourselves from the the biggest trading union in the world.
UK is a shithole now… Too much greed by the politicians.
Yeah 50% of people wanted they're patriotism now they got it and y'all f***
Why cant you just accept that the world has no borders its man made?!
I have no sympathy for these people. They were dumb enough to vote for this. Now deal with it.
Save money and eat your cat
Its because we have had a Tory government for 12yrs, its as simple as that.
"There is no alternative", the iconic catchphrase became a reality . . .
"To find myself in the situation I did today when I am confident I have committed no offence is both a shock and deeply distressing. "I know that this ongoing investigation is complicated for people, and I am grateful that so many continue to show faith in me and appreciate that I would never do anything to harm either the SNP or the country. Given the nature of this process, I cannot go into detail. However, I would like to say this and to do so in the best possible terms. Innocence is not just a presumption I am entitled to in law. "I know beyond doubt that I am innocent of any wrongdoing. To the many people who have sent messages of support over the past difficult weeks – including since today's news broke – thank you for your kindness." Quote Nicola Sturgeon. Source (Scottish?) Herald/Newsquest group.
Stop hanging your stupid mistakes on the rich and showing your frustrations on YouTube. Every intelligent economist and a decent business leader told you don't run after the clowns! And the ugly truth is, yes, you did not listen. It's heartbreaking to hear the agony of those who stood for the right and now suffer the aftermath of the ill.
Service Based Economy – Dying Manufacturing industry – Nil Natural resources – Low tax revenues – Free Welfare for all – More Immigration – Inefficient NHS – Barriers to trade – Education with no focus on STEM – Prevailing racial bias in politics and society. How do you think UK is going to fare compare to world's superpowers?
But wasn’t this the whole point of Brexit? To increase decrease supply of cheap labour, which would drive up salaries and then drive up inflation? Or am I missing something?
HAHAHAHAAHA
Greetings from germany
Might still in England the new King than may be easier to push back the inflation. But what can we do he is so old.
Seriously! if you are asking this question you are a M*n
Simple – UK economy has the highest debt burden of any country as was the case after the Second World War, meaning it had nothing for investment
Is it because of the Tories?
When they have an unelected chapatti eating PM, you know the country is doomed !
well also dont help with amount of Migrants we have in our Country,Costing British tax payers a total of 7 Million pounds a day,Also helping wars,Looking after Migrants ect…The way the UK is going,Be a time when every thing be more than Top EXPENSIVE,No ones going to be able to afford any costs,Alright for the rich people who got tons of money falling out of there back pockets every day,Mite as well become very lucky to win the Lottery
So much beating about the bush in this report. I suppose it’s BBC policy to not face reality, lest the UK comes out not looking very glorious at all (only euphemisms please, at worst!).
how about having to spend several billions of pounds every year housing illegals?
Coult it be because in 2016 , 17.4 million voters were more interested in bashing foreigners and indulging in flagshagging than in having decent standards of living and the opportunity for their kids to study and work in Europe?