Cost of Living: Why the Bank of England Raised Interest Rates
Provide content the way you agree , for your better understanding. This may include advertising from us and third parties as we understand it. You can withdraw at any time. More Information
Inflation followedRussiain many countries for decades. Soared to the highest level inUkraine Invasion into pushed up energy and food prices. The UK looks down on her 13.3% inflation peak forecast in October, but many international peers see price pressures easing in the past month. Fears of arecessionare entrenched as central banks around the world raise interest rates in response.
Inflation (the rate of increase in prices) hit her 9.4% in June in the UK, the highest in 40 years.
Last week, theBank of England(BoE) said interest rates could reach 13.3% in October if the energy price cap is raised. .
The reason was the sharp rise in energy prices brought about by Russia's invasion of Ukraine.
In response, the Monetary Policy Committee last week raised the UK's benchmark bank rate to 1.75%, the highest level since 2009.
This unprecedented market shock will be felt in many ways around the world, with the worst expected in countries such as the UK, where countries seem to reign supreme with runaway prices. There is also
Europe hit hardest by Russian oil and gas import restrictions region, relying on the Nord Stream 1 pipeline alone to Germany for up to 40% of its gas supply. According to
, the depletion of this source since the start of the war in Ukraine has caused EU energy prices to rise by 39.7% a year, and this is his July block. It was the driving force behind his 8.9% inflation rate.Eurostat
The Baltic states bordering Russia have experienced higher price increases than any other country in the EU, with Estonia at 22%, Lithuania at 20.5% and Latvia at 19.2%.
Next are a number of Eastern European countries such as the Czech Republic (16.6%), Poland (14.2%),Hungary (12.6%).
Read more: Basic public pension paid only £7,376 a year - pensioners are spoiled
while its British counterpart in Western Europe slightly better, despite facing the highest inflation rate in .
Italy reported inflation of 7.9% in July, according to their respective statistical agencies, Germany at 7.5%,France at her was 6.1%.
Germany's inflation rate has been declining since his 7.9% peak in May, but this is due to Chancellor Olaf Scholzallowing fuel taxes to be allowed by his EU. This is thought to be due to the reduction to the lowest level possible. Beginning of June.
Despite not peaking, France's inflation rate remains low compared to neighboring countries, and experts say 70% of his energy comes from domestic nuclear power plants. We believe that this is due to the country in which we operate.
Don't Miss:
Tourists caused hours of chaos after "desperately" trying to get off the plane [Response]
Putin's Allies May Launch Nuclear Attacks on Three Countries [Report]
Free Upgrades [Published]
Lewis Hamilton imitating Alonso to drop tips for new Mercedes contract [Analysis]
Federal There is also reason for optimism from the US, as the Reserve Board announced inflation this week. July's gains were lower than expected, at 8.5%.
The figure represents a significant drop from his 40-year high of 9.1% recorded in June.
Crashing gas prices and an unexpected drop in airline tickets paid off.
The US Central Bank has also gradually raised interest rates over the past few months to combat inflation, reaching 2.25% in July.
Most Asian nations have escaped the global battle of rampant inflation.
But ChinaIt hit a two-year high of 2.7%. National Bureau of Statistics
Even Japan, famous for its ultra-low inflation rate, has generally faced the opposite problem of recent deflation, which has pushed up consumer prices. 2.3% for the full year.
Australia's inflation hit its 21-year high of 6.1% in the June quarter, while New Zealand hit its 32-year high of 7.3%.
As fuel prices fall and central banks around the world raise interest rates , financial markets are starting to become a factor in the decline in inflation in the coming years.
However, while inflation remains high in the short term, consumer budgets remain tight, and rapidly rising borrowing costs are fueling fears of a recession. One after another.
The European Commission's Summer 2022 economic forecast forecasts 1.5% growth in 2023, but economists say a total cut off of Russia's gas supply , sees a bloc-wide recession as inevitable.
In parallel with the rate hike announcement, the BoE } Last month's U.S. figures showed negative growth in the first two quarters of the year, prompting the Biden administration and the National Bureau of Economic Research to believe the world's largest economy is already in recession. The last time the IMF declared a global recession, in which annual global economic output fell, was in the midst of the 2009 Great Recession. Yes, this scenario could pick up in 2023.
