April as it turns out has been a pretty “awful” month for the UK. As inflation figures continue to increase, so does widespread fear for the direction our economy is headed. Vehicle excise duty has increased, and international wholesale prices have spiked. In turn, core needs including gas and electricity are starting to cost more. Now, they worry that these trends mean a tougher economic picture than expected.
Artificial inflation skyrocketed global wholesale costs and the cost of living crisis began in earnest a few years ago. It still places an enormous burden on consumers even today. For example, as we’re all painfully aware, since April the prices of groceries, gas and other services have risen tremendously. Among the most responsible for that was airfares, dramatically boosting the headline inflation rate. Those are higher from late Easter holidays this year, which added to a peak in travel costs and pushed services inflation even higher.
Current inflation rates in the UK are much, much higher than those in France or Germany. This contrast draws attention to the profound challenges that lie ahead for the UK economy in a world of continuing global uncertainty. The President’s trade policy has been a source of much contention and debate, and the outcome could have serious repercussions on how much we import from China. Analysts suggest that uncertainty surrounding these policies may lead to an influx of cheaper imports, which could influence inflation trends moving forward.
COVID-related costs stack onto already record year-over-year increases in water bills—the largest rate hike in over 35 years—further stressing household budgets. This specific increase highlights the larger trend of increasing utility costs flowing through to everything we purchase. Even the most pessimistic of our experts still believe inflation will not exceed 4% in the next several months. This is in spite of several early predictions suggesting larger increases.
In late 2022, inflation shot up to a staggering 11%. This jump was exacerbated by former US president Donald Trump’s trade war, warning of a global slowing down in the future. Oil and other commodity prices on world markets have tanked at least in part as a result of the trade war. Their secondary impacts continue to play a large role in driving domestic inflationary trends.
Economists remain wary but watchful. On one hand, they note inflation may increase modestly in the near term, but on the other hand, they acknowledge early signs of stabilization—inflationary pressures as market conditions improve. Future watchers will remain laser-focused on these developments—twixt dour hopes, to be sure—as they signal the UK’s economic course in the coming years.