UK's central bank under pressure as inflation soars to 30-year high
January 20, 2022, 7:17 am

UK's central bank under pressure as inflation soars to 30-year high

UK-London-Bank/Pixabay

The Xinhua reported that pressure is mounting on the Bank of England (BoE), the United Kindom's (UK) central bank, to raise interest rates as official statistics released on Wednesday showed that the country's Consumer Prices Index (CPI) rose by 5.4 percent in the 12 months to December 2021, beating expectations and reaching its highest level since early 1992.

The country's Office for National Statistics (ONS) said in a report that inflation rose in December mainly due to price hikes for food and non-alcoholic beverages, restaurants and hotels, furniture and household goods, and clothing and footwear.

Grant Fitzner, chief economist at the ONS, said: "Food prices again grew strongly, while increases in furniture and clothing also pushed up annual inflation, adding that "These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month but rose this time last year."

The UK tightened restrictions in December to stem the spread of the highly contagious Omicron coronavirus variant. Fitzner said that nevertheless, "the closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible."

The UK's soaring inflation has been piling pressure on the BoE. Samuel Tombs, an economist at Pantheon Macroeconomics, an economic research consultancy, said the December data left the central bank "little choice but to hike rates again in February."

UK police asked to investigate Indian officials’ role in disputed Kashmir

Echoing Tombs, Kitty Ussher, chief economist at the Institute of Directors, a British professional organization, said: "What is of particular concern is that the change from November has come mainly from an increase in the price of food. Not only does this provide additional evidence that inflation is becoming endemic rather than transitory, it also bodes ill for households facing multiple rises in the cost of living this spring."

Ussher added: "We therefore expect interest rates to rise again when the Bank of England Monetary Policy Committee next meets in early February."

In December 2021, the BoE raised the interest rate for the first time in more than three years after cutting it to a record low during the COVID-19 pandemic. The decision came as the annual CPI inflation in the country rose from 3.1 percent in September to a decade high of 5.1 percent in November.

UK government freezes BBC license fee for 2 years

Since then, consumer prices stayed at high levels, partly as a result of surging energy prices, supply chain disruptions and labor shortages.

During the fourth quarter of 2021, British households saw their financial wellbeing deteriorate at the fastest rate since the second quarter of 2020, as surging living costs hit people's pockets and led to the steepest fall in cash availability since the start of 2014, the Scottish Widows Household Finance Index showed earlier this month.

A Financial Times article on Wednesday said that the BoE was put in a dilemma.

UK defence secretary: UK sending weapons to defend Ukraine

The newspaper noted: "It is under pressure to raise interest rates to cool spending and bring inflation down towards its two percent target, but it does not want to squeeze household budgets too far and undermine the recovery."

Alpesh Paleja, lead economist at the Confederation of British Industry, a British business organization, said that upward pressure on CPI inflation is not expected to dissipate anytime soon. "We've not seen the end of rising inflation yet. We expect it to peak in the months ahead, not least if, as expected, the energy price cap is raised."

UK economy grows bigger than before pandemic in November

Paleja added: "With prices on the rise and real wages already falling, it's likely households will face a cost-of-living crunch for much of this year."

Source: xinhua

Demands grow to restore Houthis to US list of designated terrorist groups South African president opens new vaccine manufacturing facility

BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, has announced its sponsorship of the “Innovation and Sustainable Technology Solutions Competition (GU - IST Solutions), hosted by Gulf University at its main campus.
This strategic sponsorship reflects BENEFIT’s active role in advancing technological innovation and fostering sustainable solutions to future challenges. It also seeks to empower Bahraini youth by enhancing their skills, capabilities, and competitiveness in innovation and solution development—contributing meaningfully to the broader goals of sustainable development across all sectors.
As part of BENEFIT’s active involvement in the competition, the company has announced that Hanan Abdulla Hasan, Senior Manager of Public Relations and Communication, will serve on the competition’s supervisory committee. Her upcoming participation reflects BENEFIT’s forward-looking commitment to championing academic and professional excellence.
Commenting on the occasion, Hanan Abdulla Hasan, Senior Manager of Public Relations and Communication at BENEFIT, said, “We are privileged to support this pioneering initiative, which aligns seamlessly with BENEFIT’s enduring commitment to fostering innovation and nurturing the potential of Bahrain’s youth. Our participation is rooted in a deep sense of social responsibility and a firm belief in the pivotal role of innovation in shaping a sustainable future. Through such platforms, we seek to empower the next generation with the knowledge, skills, and foresight required to develop impactful solutions that address future challenges, in line with the United Nations Sustainable Development Goals 2030.”
Dr. Aseel Al Ayash Dean of the College of Engineering in Gulf University commented, “We extend our sincere gratitude to BENEFIT for their generous sponsorship and support of the Innovation and Sustainable Technology Solutions Competition. This contribution plays an instrumental role in helping us achieve the strategic goals of this initiative, namely, cultivating a culture of innovation and sustainability, encouraging efforts that address the imperatives of sustainable development, and enhancing the practical and professional capabilities of our students and participants.”
The event will bring together a diverse spectrum of participants, including secondary school students, university undergraduates, engineers, industry professionals, entrepreneurs, academic researchers, and subject matter experts representing a wide range of disciplines.
The competition seeks to inspire participants to develop and present innovative, sustainable technologies aimed at addressing pressing environmental, social, and economic challenges. It encourages the formulation of business models that integrate advanced technological solutions with core principles of sustainability. Moreover, it serves as a platform for emerging leaders, entrepreneurs, and innovators to contribute to the advancement of the Sustainable Development Goals, promote the ethos of responsible technology, and demonstrate its transformative potential across various sectors.
Attendees will have the opportunity to view a series of project presentations submitted by participants, covering diverse areas such as eco-friendly product design, smart and sustainable innovations, renewable energy technologies, water conservation and management, waste minimisation and recycling, green architectural solutions, and sustainable transportation systems. Outstanding projects will be formally recognised and awarded at the conclusion of the event.