UK, US witness high inflation, authorities taking containment measures

24 Jun '22

2 min read

Pic: Shutterstock

Inflation in the United Kingdom hit 9.1 per cent year on year (YoY) in May this year amid hikes in food and energy prices. The figure was 9 per cent in April. Meanwhile, the highest inflation level in more than 40 years in the United States has led the Federal Reserve (Fed) to take its most aggressive step till now in its attempt to curb inflation.

UK consumer prices rose by 0.7 per cent month on month (MoM) in May, slightly above expectations for a 0.6 per cent rise but well short of the 2.5 per cent monthly rise in April.

The UK Office for National Statistics said its estimates suggested that inflation “would last have been higher around 1982, where estimates range from nearly 11 per cent in January down to approximately 6.5 per cent in December.”

The UK consumer price index, including owner occupiers’ housing costs, (CPIH) came in at 7.9 per cent in the 12 months to May, up from 7.8 per cent in April.

The largest contributions to the rising inflation rate came from housing and household services, primarily electricity, gas and other fuels, along with transport, UK media reported.

To tame inflation without aggravating the current economic slowdown, the Bank of England last week implemented a fifth consecutive hike to interest rates, though stopped short of the aggressive hikes seen in the United States.

The UK energy regulator raised the household energy price cap by 54 per cent from April 1 to accommodate a surge in wholesale energy prices, including a record rise in gas prices, and has not ruled out further increases to the cap at its periodic reviews this year.

"We at the Fed understand the hardship high inflation is causing,“ US Fed chairman Jerome Powell told a recent press conference. “The labour market is extremely tight, and inflation is much too high," Powell said.

Since the last meeting in May, "inflation has once again surprised to the upside, some indicators of inflation expectations have risen, and projections for inflation this year have been revised up notably," he added, explaining the reason behind policy rate hike by 75 basis points.

Powell expects either a 50 or a 75 basis point increase in July. That would bring the total increase to 2.00-2.25 percentage points this year, something that seemed unthinkable just a few months ago.

Fibre2Fashion News Desk (DS)

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