UK inflation hits 30-year high as households face cost-of-living crisis
Millions of normally financially comfortable Britons are facing a cost-of-living crisis as a double-whammy of accelerating inflation - driven by soaring energy bills - and tax increases kicks in this year.
Fast-rising prices are inflicting what the Bank of England says will be the biggest one-year fall in disposable income, adjusted for inflation, in at least 30 years.
After a decade of stagnant living standards - and in stark contrast to promises of a high-wage economy by UK Prime Minister Boris Johnson – many Britons are bracing for a further hit to their finances in April.
That is when energy bills are due to jump 54% to around 2,000 pounds ($2,723) a year per household - only some of which will be offset by emergency government support.
Social security contributions paid by workers are also due to increase, all against the backdrop of rising interest rates.
"There's just too much going up at once," Nicola Frape, who works as housekeeper in a care home, told Reuters in her immaculate home in Ashford, a town in south-east England. "The pressure is just going to be even worse in April."
With economies around the world rebounding from coronavirus lockdowns, prices for everything from food and clothes to haircuts and rent, as well as energy are going up, fuelled by resurgent demand and shortages due to supply chain disruptions.
Accurate national comparisons of changes in living standards are hard to make but concerns about inflation are emerging as a big factor in elections including France's presidential race in April and U.S. midterm elections in November.
Britain's consumer price inflation rate hit 5.5% in the 12 months to January, the highest since 1992 when the economy was feeling the after-effects of a late-1980s spending boom driven by Margaret Thatcher's tax cuts and big pay deals.
The CPI is set to top 7% in April. The BoE thinks it will then start to slow but will still be above 5% in a year's time.
Inflation in the United States has already surpassed 7% to reach its highest since the early 1980s, and in the euro zone it hit a record 5.1% in January.