UK inflation soars to 40-year high

Inflation has climbed to its highest level in 40 years after households were hit with higher energy bills.

The Consumer Prices Index (CPI) jumped to 9% in the 12 months to April 2022, from 7% in March.

This is the highest level of inflation since March 1982, when it stood at 9.1%.

Behind the latest rise was the unprecedented 54% increase in the energy price cap which kicked in at the start of the month. This has resulted in households paying £1,971 per year on average for gas and electricity — an amount that is expected to hit almost £2,600 when the price cap is next adjusted in October.

“Around three-quarters of the increase in the annual rate this month came from utility bills,” said ONS chief economist Grant Fitzner.

Higher fuel and food prices, driven by the Ukraine war, also contributed to the increase in the cost of living.

Inflation expected to continue to rise, peaking at over 10% later this year, and the Bank of England has warned this could lead to a recession.

RAC calls for fuel retailers to cut prices

The RAC has said that fuel prices in the UK are unjustifiably high and wholesale price drops should be passed onto consumers, according to BBC News.

The motoring organisation says there is ‘no good reason’ why prices are at their current level and that petrol retailers should reduce forecourt prices by 2p a litre.

However, a fuel retailers association said wholesale price and dollar volatility had increased pressure on independent petrol stations.

Following the RAC’s comments, Asda cut its fuel prices for petrol by up to 3p per litre and diesel by up to 2p. The new national price cap for fuel means drivers will not have to pay more than £1.25 per litre for unleaded petrol and £1.28 for diesel at 318 filling stations.

According to the RAC, petrol prices have risen almost daily since April, despite the wholesale cost falling by around 2.5p per litre since the end of May. Diesel prices have been rising for even longer.

RAC spokesperson Rod Dennis said: “Our data shows that it’s high time retailers cut the price of petrol and diesel at the pumps – we see no good reason for them to wait before passing on savings they are benefiting from which have been brought about by falling wholesale prices.

“Motorists really felt the impact of rising in prices in May, when the cost of filling up a petrol family car jumped by around £3.30 in a single month. We are now well into June, and drivers are still waiting for some relief to rising prices.”