Geoffrey Smith 

Investing.com — Wednesday’s global surge in food and energy prices drove U.K. inflation up to 33% in March. This exacerbated a rising cost of living crisis.

For the sixth consecutive month, prices at the producer and consumer levels both increased more than predicted. This pushed the annual rate to 7.0% while leaving at 11.9%. Consumer prices rose by 1.1%, while producer prices rose 2.0%.  

Like in other countries, wages are growing much more quickly than prices. According to data released Tuesday, prices increased 5.4% during the year up through February.

As a result of a dramatic increase in household energy prices, the numbers will likely get worse.  It is especially awkward that this happens at the U.K. government’s April 1st, when they also increased national insurance payments. However, the subsequent reduction in income tax by Rishi Sunak (Chancellor of the Exchequer) may help to cushion the blow. 

These figures are released a day following the U.S. reached a record 8.5% level. This was largely due to fuel, food, and housing costs. It also coincides with the 50th anniversary of the central bank of major advanced economies to increase its key rate. 

The Bank of England will likely be under increased pressure to reduce inflation. Following its most recent interest rate rise, the Bank indicated it believed the economy would cool later in the year. Therefore, there is less chance of the Bank continuing to increase rates. However, it was unchanged at $1.2995 at 2:45 AM ET (0640 GMT) 

Simon French, Panmure’s chief economist, stated (via Twitter) that there was nothing in March’s UK CPI data that would change his belief that CPI will reach a peak of around 10% this year.

He highlighted the “signs that there is a widening inflationary pressures for core items, and a large leap in input cost.”

French indicated that the BoE may still decide to hike its benchmark interest rate by 25 basis points and announce a way for it to end its purchase of U.K. bonds. He said however that a 50-basis point increase is “no longer possible” due to global developments.