UK inflation is causing ‘acute distress’, Sunak says

LONDON (Reuters) -British finance minister Rishi Sunak said on Thursday that high inflation was causing acute distress to Britons, and that he expected the Bank of England to take “decisive action” to get prices back under control.

British consumer price inflation hit a 40-year high of 9.0% in April, and the Bank of England has forecast it will reach double digits by the end of this year when regulated energy prices are set to rise by a further 40%.

“The high inflation we are experiencing now is causing acute distress for people in this country. I know they are worried, I know people are struggling,” Sunak told parliament.

“We need to make sure that for those for whom the struggle is too hard, and for whom the risks are too great, they are supported,” he added as he announced financial aid towards energy bills.

Sunak said the BoE’s independence to set interest rates was the best way to ensure inflation returned to its 2% target, following criticism from some members of his party that the central bank has been too slow to raise rates.

“I know the Governor and his team will take decisive action to get inflation back on target and ensure inflation expectations remain firmly anchored,” Sunak said.

High inflation was not just due to surging energy and food prices, and also reflected very low unemployment, he said.

“We cannot and must not allow short-term inflationary pressures to lead people to expect that high inflation will continue over the long term,” Sunak added. “It may take time, but we have the tools we need and the resolve it will take to reduce inflation.”

Financial markets expect the BoE to raise interest rates to at least 2% by the end of the year from 1% now.

(Reporting by Andy Bruce, writing by David Milliken Muvija M; editing by William James)