UK inflation hits 30-year high

According to the National Statistical Service of the United Kingdom, inflation in the UK accelerated in annual terms in December 2021 to 5.4%, which was the highest rate since March 1992. Then the inflation rate was fixed at the level of 7.1%. 

Most analysts expected that in December, the year-on-year inflation growth would not exceed 5.2%.

Prices for housing, utilities and food rose the most actively. Food products rose in price by 4.2% year-on-year, demonstrating the largest growth in 8 years. Approximately the same dynamics was demonstrated by the prices of clothing and shoes. Used cars have gained 28% in price since the beginning of the year.

Analysts note that the price increase is taking place against the background of a sharp increase in the cost of electricity following the rise in price of natural gas several times. It is expected that in April the price limit will be raised again, and the average electricity costs of British households may increase by 50% (or 700 pounds), reaching an amount of 2 thousand pounds per year.

Experts note that the latest statistics should increase the level of inflationary pressure and encourage the Bank of England to take more decisive steps. Recall that in December, for the first time since 2018, the British central bank raised the base interest rate from 0.1% to 0.25%.