To The Moon

Why is UK inflation higher than other countries?

The UK's inflation rate jumped unexpectedly last month with the cost of living rising faster here than in most of the world's advanced economies.

Price rises rose by 10.4% in the year to February, in contrast to the US and the Eurozone where inflation has eased to 6% and 8.5% respectively.

Inflation is volatile and reading too much into one month's figures would be a mistake, however, the UK's inflation rate has been persistently higher on average compared to the US and other large economies in Europe over the past year.

With the cost of living continuing to eat away at household budgets - many are starting to ask: Does the UK have its own inflation problem?

1. Food price rises

One of the main drivers of February's inflation rise was the price of food in the UK continuing to surge.

Food inflation was up 18.2% last month compared to the same time a year earlier, with salad and vegetable shortages driving the latest rises in costs for customers.

2. Wholesale gas prices

Energy bills have risen globally since Russia invaded Ukraine. However, the impact felt in the UK by higher gas prices has been harder for households and businesses than their counterparts in other advanced economies.

Analysts say the UK is more exposed to rises in the prices of wholesale gas.

3. Worker shortages and wage rises

The energy price shock is a major driver of the prolonged high inflation in the UK, but it's not the only cause with the UK also having a major worker shortage.

During the pandemic, all major countries saw their workforce shrink.

But while most leading economies have since recovered, the UK still has about 400,000 more people not working than in December 2019.

source: https://www.bbc.com/news/business-65037292