PwC comments on ONS April CPI figures

18 May 2022

Barret Kupelian, senior economist at PwC, says,

”April’s headline CPI inflation rate grew by 9% which is the highest rate for 40 years. This increase was mainly driven by the impact of the lifting of the energy price cap earlier this year,  the reversal of the VAT cut in the hospitality sector and the wider supply chain issues in the economy. Staggeringly, headline CPI jumped by two percentage points in one month, making it a one-in-200 event (see chart)

The cost of living crisis continues to intensify at a worrying pace. Despite a very tight labour market, regular pay, which is growing at around 4.2%, is not keeping up with inflation. This means that in the absence of dipping into savings, households will be under pressure to cut back or reallocate spending. Inevitably, cut-backs in household spending will have consequences to businesses and the wider economy as it is the largest driver of economic growth. 

The cost of living crisis is yet to peak. Our in-house model still suggests an additional increase in the energy price cap by around one third in October which, at worst, makes it more likely the inflation peaks in the fourth quarter this year.

Source: PwC analysis of ONS data

 

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 156 countries with over 295,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at PwC.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see how we are structured for further details.

© 2022 PwC. All rights reserved

Contact us

Follow us