LONDON (Bywire News) - With inflation hitting 9%, Britain is in the midst of the worst cost of living crisis most people can remember. Unfortunately, according to a global economic poll, it’s going to get even worse before it gets better.
Asked when the cost of living crisis would peak, seven of 13 respondents said the next quarter while three said the end of next month. An unholy concoction of the pandemic and the ongoing crisis in Ukraine has placed enormous pressure on supply chains creating surging inflation around the world. In the UK, the prospects have been exacerbated by Brexit.
The response from the government has not been reassuring. Home Office Minister Rachel Maclean suggested people should just get better-paid jobs, while Andrew Bailey, governor of the Bank of England urged people not to go out and seek higher wages out of consideration for what it might do to inflation. Both were met with all the online ridicule you’d expect.
Boris Johnson, meanwhile, said the government would definitely ‘do things’ although that was contradicted by his Chancellor Rishi Sunak who insisted he would not be able to help everyone through the upcoming crisis.
The government then suggested it might consider a windfall tax on energy giants that had profited through the pandemic before voting against it when Labour brought a motion.
For respondents in this poll, though, the answer seems clear. All said support should be aimed at lower income households.
The upshot from this study, then, is that things are tough and show no signs of getting better any time soon. Participants believe there will be no let up in inflation for the foreseeable future with rates expected to average 8.3% from the next quarter. Even that, though, could prove to be overly optimistic as the Bank of England warned the surge in inflation was its biggest challenge since it gained independence in 1997.
The BOE became the first central bank to raise the cost of living moving from its record low levels of 0.1% to 1.00%. Most respondents expect the rate to continue rising with experts warning the UK is on track for double digit inflation rates.
"Looking at the months ahead, the road to double-digit inflation is still firming, with services and food inflation still on the up. But we will need a few more beats – or more price pressures in the pipeline to build – to get there," said Sanjay Raja at Deutsche Bank.
The prospects of a recession are growing with respondents on average suggesting there was a 35% chance of a recession within the next year.
The outlook, then, is bleak and there aren’t many people who have a clear idea of how they can make things better.
(Writing by Tom Cropper, editing by Klaudia Fior)