The epidemic has caused inflation in the UK to rise to a nearly 30-year high, and the central bank is expected to accelerate the pace of interest rate hikes

London, January 19 (Xinhua Finance) -- According to data released by the National Bureau of Statistics on the 19th, the Uk's consumer price index (CPI) rose by 5.4% year-on-year in December, higher than the expected 5.2%, the highest level since March 1992.

Analysts expect the Bank of England's interest rate hikes to accelerate as inflation levels in the UK and around the world continue to rise.

Energy prices will continue to lead inflation soaring

Soaring gas and electricity prices, rising prices for food and non-alcoholic beverages, furniture and household goods, clothing and housing, and home services have all pushed up inflation, the Office for National Statistics said. In the area of food, in particular, the prices of bread and vegetables such as cereals, meat and potatoes have risen.

And the upward momentum of inflation is far from over. With the UK's energy regulator, the Office of gas and electricity markets (Ofgem), revising its energy price cap in February, experts expect energy bills for UK households to rise by around 50% by April, which will significantly affect the level of inflation in the UK.

Samuel Toums, chief UK economist at Pantheon Macroeconomic Research, said the spike in wholesale energy prices suggested Thatgem would raise the energy price cap by around 43 percent in April, with higher electricity and gas prices giving the overall CPI jumping 1 percentage point.

In addition, Toums said, service sector inflation will also rise further in April, when the VAT rate paid by hotel and tourism companies will recover to 20% from the current 12.5%.

The Bank of England is likely to raise rates faster

PwC UK economist Hannah Odinor said high inflation was one of the biggest risks to Britain's economic recovery this year. Rising cost-of-living pressures, combined with relatively positive GDP and labour market data this month, make it more likely that the Bank of England will consider another modest rate hike at its next Monetary Policy Committee meeting in February.

"However, given that the overall impact of the rate hike on the economy will take about 12-18 months to materialize, inflation is expected to continue to rise in the short term," Hannah said. This will not provide any respite for households that have been oppressed by rising prices and falling real wages. ”

Captor Macro's chief UK economist Paul Dayles predicts that the UK CPI will soar to just over 7.0% in April, so the Bank of England will raise rates faster than most people expect this year, possibly from 0.25 to 1.25%, and the next rate hike will be raised to 0.50% in February.

Concerns about persistent inflation have intensified

Melanie Baker, a senior economist at Fund Manager Royal London Asset Management, said many sources of rising inflation could still be described as temporary, but concerns about the timing of inflation were also increasing as inflation rose unexpectedly. The prospect of high interest rates, high inflation and unmatched wage growth means that the financial situation of many households will deteriorate.

Deloitte senior economist De Palatim De said that unlike in the early 1990s, the current inflation trend is mainly driven by soaring commodity and commodity prices. This is the result of changes in supply and demand related to the outbreak. Given that service prices are rising much more slowly, it suggests that domestic price pressures in the UK are relatively weak.

Investec analyst Sandra Horsfield expects the UK government to take a series of mitigation measures to limit the rise in CPI inflation and provide additional help to affected low-income households. But the amount and mechanism for providing help is currently unclear.

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