Endemic Inflation fuels UK consumer prices rise

Endemic inflation

Consumer prices in the United Kingdom have risen at the fastest pace in almost 30 years as higher costs for energy, transportation, food and furniture squeezed household incomes. Inflation `(which is becoming endemic), accelerated to 5.4% in the 12 months through December, up from November’s 5.1%, the Office for National Statistics said Wednesday. Last month’s annual figure is the highest since March 1992, when inflation stood at 7.1%.

Economists warned that inflation is likely to rise further in the coming months as tax increases and the full impact of a recent surge in energy prices hit consumers. Gas and electricity bills for millions of households are expected to balloon by 50% or more in April when a semi-annual adjustment in the energy price cap takes effect.

“What is of particular concern is that the change from November has come mainly from an increase in the price of food,” said Kitty Ussher, chief economist for the Institute of Directors. “Not only does this provide additional evidence that inflation is becoming endemic rather than transitory, it also bodes ill for households facing multiple rises in the cost of living this spring.”

Prices are rising in many countries as the world economy recovers from the coronavirus pandemic, boosting demand for energy and other raw materials and driving wages higher.

U.S. consumer prices rose 7% in the 12 months through December, pushing inflation to the highest level in nearly 40 years. It accelerated last month to a record 5% in the 19 European Union countries that use the euro.

While prices are rising at the fastest pace in decades, inflation remains well below the levels of the early 1970s when a global energy crisis triggered double-digit increases.

The latest U.K. figures will increase pressure on the government to shield low-income families from price increases. Critics have called on Prime Minister Boris Johnson to provide more help with fuel bills and rethink a temporary 1.25% income tax increase to boost funding for the National Health Service and social care.

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Dean Nestor

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