During the month of July, the consumer price inflation in the UK was at 10.1%. This is the highest level since the February of 1982 and has raised red alarms among government officials and the public alike. During the month of June, inflation was only 9.4% which indicates that inflation is rising instead of slowing down.
This rise in inflation in the United Kingdom has further squeezed the household budgets around the country. As a result, consumer spending will drop which will ultimately affect a lot of industries. In turn, this could increase the jobless rates as well!
Earlier, the Bank of England warned that a recession in the country was highly likely. To prevent that from happening, the interest rate was increased by 0.5 basis points - As a result, the interest rate in the UK is now at 1.75%, which is also a level not seen in years.
During the month of October, the inflation forecast is set at 13.3%, which is an indication that inflation is getting out of the BoE's hands.
With every upward revision of inflation, the Bank of England is left with even fewer tools to combat it! On top of that, all the major analysts agree that BoE will continue on its path to raising interest rates in the coming months.
But this interest rate hike from the BoE will be enough to combat the inflation? Right now, the numbers do not suggest a very good picture as inflation is only rising month after month.
British consumers are not the only ones who are facing high inflation. In fact, there are a lot of other countries which are facing high inflation all over the world! Right now, the July inflation numbers from the US were at 8.5%, which is 40 years high! Similarly, inflation is getting close to double digits in multiple countries and have become a serious problem.