The UK’s headline rate of inflation was tracked at 9 per cent during April, which represents a high not seen for 40 years.
Economists had been anticipating steep price rises in the spring months and inflation is expected to remain persistently high for much of this year.
Consumers across the country are known to be struggling increasingly to cope with pressure on their incomes, while for businesses trading conditions are also becoming considerably more difficult.
The British Chambers of Commerce (BCC) has described the latest inflation figures as “eye-watering” and said persistent price rises are hindering companies’ ability to invest and to operate at their full capacity.
Surging energy and commodity costs were cited as the key drivers of inflation in recent weeks, while the BCC also pointed to the reversal of a reduction in VAT for the hospitality sector as a contributory factor.
In order to help support UK companies, the BCC’s head of economics Suren Thiru has called for the government to reverse its recent rise in National Insurance Contributions and to consider cutting VAT on business energy bills to 5 per cent.
Mr Thiru also said that the latest inflation figures make a further interest rate increase in June an inevitability and suggested that there is now a “real chance the UK will be in recession by the third quarter”.
Meanwhile, the Confederation of British Industry (CBI) has called on government policymakers to find ways to help people facing serious hardship due to rising inflation, along with ways of supporting cashflows among vulnerable businesses.
For its part, the Federation of Small Businesses (FSB) has highlighted some of the issues that small firms are having in terms of getting the balance right between passing on rising costs to customers and absorbing them while remaining solvent.
“We hear a lot from politicians about the cost of living crisis, but very little about the cost of doing business crisis which underlies it,” said Martin McTague, the FSB’s national chair.
“The government must now look at targeted interventions that will do most for local economies hardest hit by the pandemic which are now faced with low growth and surging inflation.”