In 2024, the annual inflation rate for the United Kingdom is expected to be 2.2 percent, following an annual rate of 7.3 percent in 2023, and 9.1 percent in 2022. Before 2022, the inflation rate was at its highest in 2011 when it reached 4.5 percent, and was lowest in 2015 when an annual inflation rate of zero percent was recorded. Inflation has been surging in the UK since late 2021, and reached a 41-year-high of 11.1 percent in October 2022. Since that recent peak, inflation has gradually subsided, and was four percent in January 2024.
Inflation down but not out in 2024
Although there are some positive signals regarding UK inflation decelerating throughout 2023, prices are still rising at quite a fast rate, especially in certain sectors. Food inflation, for example, only fell below double-figures in November 2023, and was still rising by 6.9 percent in January 2024. As of that month, however, alcohol and tobacco prices were rising faster than any other sector, with an inflation rate of 12.4 percent. Additionally, underlying core inflation, which measures prices rises without food and energy, is slightly above the headline inflation rate, and was 5.1 percent as of the most recent month. With some aspects of inflation seemingly becoming embedded in the UK economy, this will likely prolong the currentCost of Living Crisis engulfing UK households.
Inflation crisis across in the world in 2022
The UK has not been alone in suffering from runaway inflation over the last few years. From late 2021 onwards, various factors converged to encourage a global acceleration of prices, leading to the ongoinginflation crisis. Blocked-up supply chains were one of the main factors as the world emerged from the COVID-19 pandemic. This was followed by energy and food inflation skyrocketing after Russia's invasion of Ukraine. Central bankinterest rates were raised globally in response to the problem, possibly putting an end to the era of cheap money that has defined monetary policy since the financial crash of 2008.
