Interest rate in the UK: Bank of England just made the biggest increase in 27 years

The Bank of England raised the cost of borrowing by 50 basis points to 1.75% – sixth time the central bank has been raising rates since December and follows the recent hike European Central Bank as well as Federal Reserve tame outrageous prices.

The central bank said in a press release on Thursday that inflationary pressures have “significantly increased” in recent weeks.

This largely reflects the nearly doubling of wholesale gas prices since May due to Russia’s curtailment of gas supplies to Europe and the risk of further restrictions.

The Bank of England also predicts that inflation will top 13% in the fall, when electricity bills are due to rise, and “remains at very high levels for most of 2023.”

But the Resolution Foundation think tank said Wednesday that it expects the cost of energy to drive consumer prices above 15% next year.

Wage growth fails. British workers’ real wages hit biggest drop in over two decades between March and May, official data showed the past month.
In response, the British tightened their belts, spending less in supermarkets and shops. cancel your streaming subscriptions.

Global natural gas prices began to rise last year as the global economy reopened after the pandemic, resulting in a surge in demand. Soaring costs have affected consumer prices.

Russia’s invasion of Ukraine at the end of February – and the subsequent oil and gas supply interruptions — only exacerbated the situation by raising fuel prices to record highs.
British households are struggling. The average annual electricity bill is up 54% this year to £1,900 ($2,300), with further increases almost certain.
According to research firm Cornwall Insight, the average annual bill for millions of households will be fly another 83% from January to £3,600 ($4,380). That’s £300 ($365) a month for gas and electricity.

According to a new report from consultancy BFY Group, average electricity bills in the United Kingdom could top £500 ($613) in January alone.

A driver refuels at an Esso Tesco filling station on July 24, 2022 in London, England.  Many supermarket gas stations are still charging high prices at the forecourt, despite the decline in wholesale prices over the past few weeks.

Poverty fighters have been sounding the alarm for months now.

According to a June report from the Joseph Rowntree Foundation, about two-thirds of all low-income families were left without basic necessities like heating or showers this year.

BUT looming recession could exacerbate the situation by triggering a wave of job losses. Concerns about a slowdown in economic growth intensified in June when the Organization for Economic Co-operation and Development said that the UK economy is expected to stagnate next year – the only country among the G7 to do so.

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