ONS: Inflation reaches 9%

The Bank of England (BoE) expect it to reach 10% later this year, with Monetary Policy Committee (MPC) member Michael Saunders expressing his personal opinion that it could exceed double digits.

BoE governor Andrew Bailey has further warned in recent days of “apocalyptic” inflation pressure arising from food shortages, although former trade minister Liam Fox accused Bailey of "complete hyperbole” as he criticised BoE for failing to do more to ease inflation.

“It’s a diversionary tactic from a bank whose primary statutory duty is monetary stability and who patently failed to do their day job properly. His whole argument — that this is global inflation — is just not true,” Fox said.

Chancellor Rishi Sunak has also faced criticism for failing to do enough. Conservative MP Sir Bernard Jenkin, chair of the liaison committee, will today (18 May) warn that “the economic situation is far worse than the government is prepared to admit”.

“The measures that need to be looked at are £20 uplift in universal credit, transferring the cost of energy green levies to the exchequer, abolishing VAT on domestic fuel, increasing the warm homes scheme, and increasing the pensioners’ fuel allowance,” he will say.

Former secretary of state for the Department for Work and Pensions (DWP) Stephen Crabb, who was forced to resign in 2016 after it emerged he had sent explicit messages to a teenager after interviewing her for a job, echoed Jenkin’s concerns.

Crabb warned that “both the scale of the current crisis and the speed of its impact are alarming”. He said the way to protect the most vulnerable was “finding a way to increase pension and benefit levels to a realistic level long before the next uprating is due in April 2023”.

StepChange Debt Charity data shows that inflation is increasingly “a driver for debt for people seeking debt advice”. It said the cost of living is the third most commonly cited reason for debt amongst its clients.

Wider survey data commissioned from YouGov by the charity in March revealed how worried people in Great Britain are feeling about the risk of debt arising from inflation. When asked how worried people felt about their own financial situation in light of the rising cost of living, only five percent said they were not worried at all.

Almost a quarter (24%) were worried and felt they were likely to go into debt as a result but would be able to cope, while 11% felt they were likely to incur debt that they would not be able to repay.

Commenting on the rapidly escalating problem of inflation for people experiencing problem debt, StepChange director of external affairs Richard Lane said: “The widening gap between people’s incomes and the cost of their essential spending is opening up problematic fault lines in household finances and contributing to debt problems, especially for lower income households whose budgets have little ability to flex.

“While we don’t doubt that policymakers are aware of the problem, at present the measures being taken to plug the gap are simply not sufficient to help many households avoid incurring debt as a result of the rising cost of living."