U.K. Inflation Soars To 6.2%, The Highest In 30 Years

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U.K. inflation in February reached an annual 6.2%, the highest since March 1992, coming from a previous 30-year record of 5.5% recorded in January. Food and energy prices are playing a major role amid Russia’s invasion of Ukraine.

U.K. Inflation On A High

As reported by CNBC, inflation in the U.K. reached a fresh record in February and beat the 5.9% estimate by experts. Consumer Price Index (CPI) inflation jumped 0.8% from January and above a 0.6% expectation —the biggest monthly increase since March 2009.

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To clamp on roaring inflation while giving the economy some space for growth, the Bank of England has increased interest rates three times, from a historic low of 0.1% to 0.75%.

As experts anticipate inflation could reach 8% in the second quarter of the year, the Monetary Policy Committee underlined the crunch on household incomes given the soaring commodity prices amid the Ukraine invasion.

In a report Wednesday, the Office for National Statistics explained: “The largest upward contributions to the February 2022 CPIH 12-month inflation rate came from housing and household services and transport.”

Further Raises

Paul Craig, portfolio manager at Quilter Investors, said, “This morning’s inflation data shows just how dire the situation is, and there is a clear need for the government to act to help save many from slipping into financial difficulty as their wages are quickly swallowed up.”

“Markets and developed economies are continuing to battle soaring inflation alongside the uncertainty surrounding Russia’s war on Ukraine. Given the delicate market environment, investors will need to watch the data and markets closely and allocate accordingly,” he added.

As for the impact of energy prices on U.K. inflation overall, Dan Boardman-Weston, chief investment officer at BRI Wealth Management, asserts that, although the influence is still high, the overall pace is slowing.

“The data continues to point towards another few months of rises in the rate of inflation, but we expect this to ease as we head into the summer. Given the strength of the labor market and the overall economy, it seems inevitable that the Bank of England will continue down the path of further rate rises.”