Economics Update: May 2022

May 5, 2022

Given the rise in petrol prices since Russia invaded Ukraine, it is possible inflation in April was around 9%. That would be the highest rate since the index was first complied in the late 1980s.

Even before the big rise in energy bills in April, around a third of UK households could not afford an unexpected expense of £850. This proportion has risen since last year; the real income squeeze may be coming to a head now, but the crisis has been building for some time.

Although the Bank of England increased interest rates on 5 May, that will have little impact on the period of stagflation we now appear to be in. And with 80% of residential mortgages on a fixed rate, this rise will not have much impact on the ability of borrowers to make their payments. But over half of renters are already struggling.

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