Why Britain has the highest inflation in the G7

Why Britain has the highest inflation in the G7

Wednesday was not a good time for chancellor Rishi Sunak and Bank of England governor Andrew Bailey to be steering the UK economy.

As G7 finance ministers and central bank governors met in Bonn, Sunak and Bailey had the dubious honour of presiding over the worst inflation in the group of advanced economies.

Official data released on Wednesday showed UK inflation surging to 9 per cent in April, and suggested Britain was enduring the worst of all worlds with its price rises compared with other countries.

Like many European economies exposed to higher gas and electricity prices that have been exacerbated by Russia’s invasion of Ukraine, UK energy costs were 69 per cent higher in April compared with a year ago. The full effects of the war will be felt by British households in October, when the energy price cap is expected to be raised, in a move that is likely to take inflation towards 10 per cent in the autumn.

Meanwhile, the UK labour market is red hot, with unemployment at a near 50-year low, and strong pay growth involving bonuses, according to official data released on Tuesday. In this sense, Britain’s economy is overheating in a similar way to the US’s, and