Inflation Surges To Highest Level In Over Three Years

Inflation rate in April reached highest in three and a half years to 2.7 percent and one of the primary contributions to it is rising cost of electricity.

Office of National Statistics also blamed the rise in cost of air fares, car tax and clothing that resulted with the rise in consumer price inflation (CPI).

The forecast for April was 2.6 percent and that for the month of March was 2.3 percent.

Comparatively the wages didn’t rise much and was limited to an increase of just 1.9 percent last month and the opposition parties are highlighting the increasing pressure on living standards.

The devaluation of sterling following Brexit vote in July 2016 has pushed up the import prices and this has made the clothing and food expensive.

Earlier this month the Bank of England predicted inflation could go up to 2.7 percent this summer, but now it seems a revision is required as ONS mentioned the producer output price inflation was above 3 percent in April.

“These worrying levels of inflation show the Brexit squeeze is hitting shopping baskets across the country,” said Liberal Democrat shadow business secretary Susan Kramer.

TUC general secretary Frances O’Grady said workers should be protected from such slump in real wages and all the political parties need to explain now how to create better-paid jobs.

Meanwhile, economists too are divided how inflation could be over the period of next year and some even fears to be above 3 percent.

It is also believed the Bank of England will sit tight on interest rates throughout 2017 and 2018.