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Inflation figures news live: Cost of living crisis deepens as price rises hit 40-year high

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<p>Inflation has hit its highest level in 40 years amid the deepening cost of living crisis</p>

Inflation has hit its highest level in 40 years amid the deepening cost of living crisis

(Getty Images)

Inflation has hit its highest level in 40 years amid the deepening cost of living crisis.

The rate shot up to a fresh record high of 9 per cent last month, up from 7 per cent in March, following a £700 increase to energy bills.

It comes after Andrew Bailey, governor of the Bank of England, warned of “apocalyptic” food prices in the months ahead due to the war in Ukraine. The central bank has said inflation is likely to keep rising to around 10 per cent this year.

The Confederation of British Industry also warned of a “historic squeeze” in household finances and a “tough trading environment” for businesses.

The business organisation increased pressure on chancellor Rishi Sunak to bring forward extra help to deal with the rising cost of living.

The British Chambers of Commerce said the “unprecedented” impact of rising inflation meant a “real chance” of a recession later this year.

Its head of economics Suren Thiru called for Mr Sunak to reverse the rise in National Insurance Contributions and cut VAT on business energy bills to 5 per cent.

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Impact of rising inflation on poorer households higher at 10.2%, says think tank

The impact of rising inflation is being felt harder in poorer households, living standards think tank the Resolution Foundation said.

While CPI inflation hit 9 per cent in April, the think tank estimates that inflation for the poorest households was higher still at 10.2 per cent because they spend a greater share of their budgets on energy bills, which have risen sharply.

Jack Leslie, senior economist at the Resolution Foundation, said: “Inflation reached a 40-year high last month off the back of a sharp rise in energy bills and the highest food price inflation in a decade.

“These recent drivers of inflation mean that lower-income families are facing the most severe cost pressures, with their inflation rate already hitting double digits.

“Inflationary pressures are likely to continue to grow through the year as the effects of higher energy prices continue to work their way through businesses and into consumers’ pockets.

“Nobody knows how long these pressures will last, or how workers will respond via higher wage demands, which is why the Bank faces a tough judgement on the pace and scale of interest rate rises.

“But one thing is certain, the government must provide further targeted support for those lower income families at the sharp end of this crisis.”

Chiara Giordano18 May 2022 08:35

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‘Real chance’ of recession later this year

The British Chambers of Commerce said the “unprecedented” impact of rising inflation meant a “real chance” of a recession later this year.

BCC head of economics Suren Thiru called for Rishi Sunak to reverse the rise in National Insurance Contributions and cut VAT on business energy bills to 5 per cent.

He said: “The jump in UK inflation in April is eye-watering and underscores the growing cost-of-living crisis facing households and the damaging squeeze on firms’ ability to invest and operate at full capacity.

“The marked acceleration in the headline rate in April reflected the continued upward pressure on prices from surging energy and commodity costs, as well as the energy price cap rise and the reversal of the VAT reduction for hospitality in the month.

“The scale at which inflation is damaging key drivers of UK output, including consumer spending and business investment, is unprecedented and means there is a real chance the UK will be in recession by the third quarter of the year.”

Another interest rate rise in June was “inevitable” but that would do little to address global factors driving inflation up, he said.

Chiara Giordano18 May 2022 08:19

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Warning of ‘historic squeeze’ in household finances

The Confederation of British Industry warned of a “historic squeeze” in household finances and a “tough trading environment” for businesses.

The business organisation increased pressure on chancellor Rishi Sunak to bring forward extra help to deal with the rising cost of living.

CBI chief economist Rain Newton-Smith said: “Inflation was always likely to hit hard in April given the energy price cap increase.

“Looking ahead, inflation is likely to stay high, with a resulting historic squeeze in households’ incomes and a tough trading environment for businesses. It is critical the government explores options to help people facing real hardship now, and support cashflow for vulnerable firms.

“Stimulating business investment is also crucial, to both plug the near-term gap in growth and to shore up the economy’s potential to withstand future shocks.

“Turning good intentions on a permanent investment deduction into a firm commitment, setting out an infrastructure roadmap and publishing a digital strategy are steps which can be taken without delay.”

Chiara Giordano18 May 2022 08:05

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Inflation reaches fresh record high at 9 per cent

Prices rose at their fastest rate in more than 40-years in the 12 months to April as households struggle with a sharp increase in energy bills.

Inflation climbed to a fresh record high of 9 per cent last month, up from 7 per cent in March, following a £700 increase to energy bills.

Around three-quarters of the overall surge in inflation came from higher energy bills.

Our economics editor Anna Isaac has the full story:

Chiara Giordano18 May 2022 07:50

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Good morning and welcome to The Independent’s live coverage of the cost of living crisis.

Inflation has hit its highest level in 40 years after shooting to 9 per cent in April, the Office for National Statistics has revealed today.

Stay tuned for rolling updates and reaction.

Chiara Giordano18 May 2022 07:48

https://www.independent.co.uk/news/business/inflation-figures-price-latest-cost-of-living-crisis-b2081519.html

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