Five pounds in Britain today will only go as far as four pounds did in 2019 - a rate of inflation unmatched by other Western European countries over the same period.
Annual consumer price inflation (CPI) in Britain fell to 10.1% last month, defying forecasts for a bigger drop from February's 10.4%. The figures emphasized the risk that Britain suffers high inflation for longer than other similar economies due to its reliance on natural gas for heating and electricity and the structure of state subsidies to smooth out price changes.
The Bank of England is anxious about the fact that high inflation might cause a lasting increase in wage demands and business pricing strategies, exacerbated by a post-pandemic reduction in the labor force and trade and jobs market problems caused by Brexit.
"Inflation in the UK has risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds: a big energy shock like the euro zone and labor shortages - even worse than the U.S.," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics.
Source: reuters.com