Inflation: Andrew Haldane warns prices could rise until 2024
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The latest figures for the UK show that inflation is measured at seven percent, replicating levels previously seen during 1992. Inflation is the rate at which prices are rising and the bad news for embattled Brits already feeling the financial pinch is that experts predict things to get even worse before they start to recover.
Between February and March, the consumer price index (CPI) measure of inflation grew from 6.2 to seven percent.
Rising fuel prices were blamed as the biggest contributor for this development, according to the Office for National Statistics (ONS).
Average prices climbed 12.6p in that period, which represents the largest monthly growth since records began in 1990.
Russia’s invasion of Ukraine has served to exacerbate these issues, with a number of countries reducing their imports from Moscow and thus swelling prices elsewhere.
UK vs EU inflation: Rising fuel prices push Britain and bloc to record levels (Image: GETTY)
Britons are currently feeling the financial pinch from rising interest rates and inflation (Image: GETTY)
UK vs EU inflation
In April the annual inflation rate for the Euro Area rose to a fresh record high of 7.5 percent – marginally greater than Britain, leaving EU states worse off.
Compared with the month beforehand this represented an increase from 7.4 percent and was mostly in line with market expectations.
At present, the rate of inflation for the European Union (EU) is now more than three times above the European Central Bank (ECB) target of two percent.
The latest figures for the UK show that inflation is measured at seven percent (Image: GETTY)
The same can also be said for the UK where the Bank of England (BoE) has set an identical goal.
During the next two years, the BoE expects to meet its two percent threshold once interest rates have risen above one percent.
To date, interest rates stand at one percent exactly after the Bank swelled them by 0.25 percentage points last week.
Their decision to do so signals the highest level that interest rates have been at since February 2009.
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By July analysts are expecting the ECB to introduce a hike to interest rates (Image: GETTY)
By July analysts are expecting the ECB to introduce a similar hike to interest rates in the Euro Area to combat rising inflation.
Following June 2021 inflation has been slowly growing in the EU where it measured at 1.9 percent.
With the exception of July and September of 2021, the same pattern has been observed in the UK.
In fact, the rate of inflation here has been growing for a longer period of time – since February last year.
How can you tackle inflation?
In Britain, the traditional response of the BoE to rising inflation is to raise interest rates.
The idea is that when borrowing is more expensive, people will have less money to spend. As a result, they will buy fewer things and prices will stop rising as fast.
But when inflation is caused by external forces, such as rising global energy prices, then there is a limit as to how effective interest rate rises can be in curbing inflation.
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