UK inflation hits 7% as cost of living crisis deepens – business live | Business

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Larry Elliott: Stagflation looks a racing certainty as worse to come for UK households

High inflation is going to stick around for a while, our economics editor Larry Elliott warns, meaning the UK is likely to suffer stagflation, or even recession.

While in the summer there should be some reduction in the annual rate, there is likely to be another rise in the autumn when the energy price cap is again adjusted. Inflation will remain at 7% or above for the rest of 2022.

The strength and persistence of inflation creates economic and political problems for the government. Stagflation – a toxic combination of stagnant output and rising inflation – is a racing certainty but there is also a risk of an intensifying squeeze on living standards caused by prices rising faster than wages, driving the economy into recession.

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