United Kingdom inflation accelerated to 7% in the 12 months through March, the highest annual rate since March 1992, the Office for National Statistics said. A day before the United States US Labor Department said that its consumer price index jumped 8.5% last month.
Likewise German inflation surged to a record high since reunification in 1990, official figures showed, amid soaring energy costs in the wake of the Russian invasion of Ukraine. German Consumer prices rose by as much as 7.3% from a year earlier in March, according to the federal statistics agency Destatis, up from 5.1% in February.
UK faces what economists say will be the biggest drop in living standards since the mid-1950s as rocketing energy costs, rising food prices and tax increases overshadow rising wages. In effect disposable household incomes, adjusted for inflation, are expected to drop by 2.2% this year, according to the government’s independent budget adviser.
Household natural gas prices jumped 28.3% over the last year, and electricity prices rose 19.2% as the global economy recovered from the Covid-19 pandemic, increasing worldwide demand for energy.
Prices will continue to rise after Britain’s energy regulator authorized a 54% increase in gas and electricity bills for millions of households that took effect in April.
Transportation costs are also rising, with the cost of gasoline and diesel fuel rising by an average of 30.7% over the past year, the biggest increase since current records began in January 1989, the Office for National Statistics said.
Meanwhile in Germany the panel of independent economic advisers has forecasted that the country's gross domestic product (GDP) will expand by only 1.8% this year. In November the advisory panel predicted a 4.6% jump for 2022, but that has now been cut.
We were already having a bad time thanks to the omicron wave and now things are even more bleak, Monika Schnitzer from the German Council of Economic Experts said in an interview.
If Russian energy supplies were to completely stop, that would jeopardize any post-COVID economic recovery, she added.