The Bank of England raised the cost of borrowing by 50 basis points to 1.75% – the sixth
when the central bank has raised rates since December, and follows recent hikes in the European Central Bank
and Federal Reserve
to tame soaring prices.
The central bank said in a press release on Thursday that inflationary pressures had “intensified significantly” in recent weeks.
“This largely reflects a near doubling of wholesale gas prices since May, due to the restriction of gas supplies from Russia to Europe and the risk of further restrictions,” he said. declared.
The Bank of England has also forecast inflation to top 13% in the autumn, when energy bills are expected to rise, and will “remain at very high levels for much of 2023”.
But the Resolution Foundation, a think tank, said on Wednesday it expects energy costs to push consumer price inflation past 15% next year.
Wage increases are not following. The real wage of British workers suffered its biggest drop in more than two decades
between March and May, official data presented last month.
Britons have tightened their belts accordingly, spending less in supermarkets and dropping their streaming subscriptions
Global natural gas prices began to rise last year as global economies reopened from pandemic shutdowns, causing demand to surge. Soaring costs fueled consumer prices.
Russia’s invasion of Ukraine at the end of February — and oil and gas supply disruptions
— has only made matters worse, helping to drive fuel prices to record highs.
British households are struggling. The average annual energy bill has increase by 54% this year
to reach £1,900 ($2,300), with an almost certain further increase.
According to research firm Cornwall Insight, the average annual bill for millions of households climb an additional 83%
from January to £3,600 ($4,380). That’s £300 ($365) a month spent on gas and electricity.
Average UK energy bills could top £500 ($613) in January alone, according to a new report from consultancy BFY Group.
Anti-poverty activists have been sounding the alarm for months.
According to a June report from the Joseph Rowntree Foundation, about two-thirds of all low-income families have gone without essentials like heating or showers this year.
A impending recession
could make matters worse, triggering a wave of job losses. Fears of an economic slowdown intensified in June when the Organization for Economic Co-operation and Development said it expected Britain’s economy to stagnate next year – the only G7 nation to do so. TO DO.