Britons are currently facing the sharpest annual rise in the cost of living in 30 years; fuel prices are shooting to record-breaking levels, while energy bills saw a 54 percent increase in April. The Bank of England issued a warning the UK may even be heading towards a recession before the end of the year. However, it’s become apparent this isn’t just a problem in Britain.
The Consumer Price Index (CPI), the international measure that examines the inflation for a typical basket of goods, jumped to seven percent in the UK in March.
This means goods now cost seven percent more than last year and more worryingly, prices are currently rising faster than wages.
The goods and services measured include everything from transportation and food to medical care and is weighted towards the areas most consumed by households.
This spiralling cost of living has been described by Mr Sunak as a global challenge, so how might other countries compare?
How does UK inflation compare to the EU?
Using the CPI, UK inflation rates jumped to seven percent in the year to March, up from 6.2 percent in February.
This increase is reported to be the highest rate of CPI inflation since records began in 1997, and modelled figures show it to be the highest general rate of inflation since March 1992.
This is a scarily high increase since last year, as records show inflation in the UK reached just 0.4 percent in February 2021.
However, comparing these figures to those of the EU show the EU to be battling a marginally higher rate than the UK.
EU inflation was reported to be 7.8 percent in March, up from 6.2 percent in February, and even last year, the EU was still slightly ahead of the UK with a recorded 1.7 percent inflation rate in March 2021.
Inflation in the Eurozone, the area consisting of EU countries that have fully incorporated the euro as their national currency, was provisionally estimated to have reached 7.5 percent in April, up from 7.4 percent in March.
This, according to the House of Commons library, is now a record high, while inflation in the Eurozone rested at 1.6 percent in April 2021.
Germany’s inflation rate has been provisionally estimated to have reached 7.8 percent in April, up from a recorded 7.6 percent in March.
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France is currently sitting lower at an estimated 5.4 percent inflation rate in April, a marginal increase from 5.1 percent in March; but the lowest rate recorded in the EU is Malta at 4.5 percent.
Lithuania, however, saw the highest inflation rate of all EU countries in March, reaching staggering levels of 15.6 percent, while Estonia falls just below at 14.8 percent.
This year’s inflation increases have largely been the product of the energy crisis, an issue that is much more severe in Europe than in the UK due to the UK being less reliant on Russian oil and gas.
Another factor impacting these high rates is the economic recovery following the shock of COVID-19.
Global supply chains still need to stabilise, and issues around production, travel restrictions and workforce problems are still due to see a recovery, which answers for the higher prices.
These high inflation rates are also reflected in other areas of the world, such as the US, which reached seven percent in December 2021, a rate reported as a 40-year-high.
This was also driven by similar factors as the UK and EU, however, once these supply chains see more of a recovery, it’s hoped global inflation levels will start to fall over the course of the year.