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Saturday, June 22, 2024

UK inflation reduces but stays high.


The CPI slightly decreased to 10.7% last month.

According to figures released on Wednesday, British inflation dropped in November but remained close to its highest level in more than 40 years as a cost-of-living crisis prompts new strikes.

The Office for National Statistics (ONS) said that, compared to predictions of 10.9%, the Consumer Prices Index slightly decreased to 10.7% last month.

Although that represented a slight improvement from the 11.1% recorded in October—the highest level since 1981—pressures remain severe due to increasing domestic energy and food costs as a result of Russia’s war on Ukraine.

The announcement comes amid severe strikes by employees in the public and private sectors who are calling for increased pay after seeing their pay significantly reduced by this year’s growing cost of living.

Railway workers are currently in the middle of a two-day nationwide strike that has already lasted two days. This strike is the first of a month-long series of walkouts that will cause Christmas misery for millions of people, including nurses, passport check agents, and postal workers.

The Bank of England’s interest rate decision, which is generally anticipated to deliver the ninth consecutive boost as officials try to combat rising prices, was announced on the same day as the publication of November’s inflation figures.

Grant Fitzner, chief economist for the ONS, highlighted that although remaining at historically high levels, annual inflation slightly decreased in November.

The most noticeable example of this is motor fuels, which are still rising in price but at a slower rate than at this time last year.

The war in Ukraine, which is being fueled by Russian President Vladimir Putin, as well as the economic recovery from Covid restrictions are to blame, according to British Finance Minister Jeremy Hunt.

“High inflation is wreaking havoc on economies across Europe, and I know families and companies are hurting here in the UK,” Hunt warned of the effects of COVID-19 and Putin’s decision to weaponize gas.

“My first aim is to bring inflation down so that people’s earnings may increase.”

“I realise that many people are struggling right now, but it is critical that we make the difficult choices necessary to combat inflation, which is the number one threat that makes everyone poorer.

The Conservative government of Prime Minister Rishi Sunak maintains that inflation-busting salary increases will make the situation even worse.

On Thursday, nurses will leave work for the first time in the 106-year existence of their union.

Meanwhile, economists anticipate that the BoE will increase its benchmark lending rate on Thursday from 3.0% to 3.5%, further reducing Britons’ disposable earnings due to growing credit costs.

The BoE’s official target level for inflation remains at more than five times that low of 2%.

Despite this week’s news of economic growth in October, Britain is still headed for a protracted recession as a result of the impacts of its greatest inflation in decades.

Both the government and the BoE have stated that they think the UK is already in a recession, which they both anticipate lasting all of next year.

Although Wednesday’s figures gave rise to optimism that inflation may have peaked in October, analysts caution that more significant interest rate increases might further gloom the future.

According to Susannah Streeter, senior investing and markets analyst at stockbroker Hargreaves Lansdown, “inflation may be past the crest, but considering that prices for UK consumers have scaled a mountain, there is still a vertiginous slope to travel before it’s back down to less perilous levels.”

The ONS, however, moved quickly to quell talk of a peak.

“Some could describe this as a peak. I believe it is too soon. Let’s wait a few months since we’ve only witnessed one decline from a 40-year high,” Fitzner said on BBC radio.


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