Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April
RIYADH: Britain’s inflation hit a staggering 40-year high as the war in the east continues, while the US’ housing dropped slightly in April and was accompanied by a plunge in building permits which posed a challenge for entry-level and first time buyers in terms of affordability.
UK inflation
British inflation surged last month to its highest annual rate since 1982, pressuring Finance Minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession.
Consumer price inflation hit 9 percent in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.
Britain has the highest inflation of Europe’s big economies and almost certainly in the Group of Seven, with Canada and Japan yet to report April data. Neither are likely to match Britain’s price growth which also looks set to be longer-lasting.
Last month, the IMF forecast Britain in 2023 faced slower economic growth and more persistent inflation than any other major economy.
Soaring energy bills were the biggest inflation driver, reflecting April’s increase in regulated energy tariffs. Knock-on effects from Russia’s invasion of Ukraine mean those bills are likely to jump again in October.
“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action,” Sunak said.
A Reuters poll of economists had pointed to a reading of 9.1 percent, up from 7 percent in March, and sterling fell.
A survey on Tuesday showed two in three people had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets and just over a quarter say they have skipped…