Economists and the head of the UK’s energy regulator have cast doubt on Boris Johnson’s claim that inflation fears are “unfounded”.
The prime minister played down concerns about price hikes and the cost of living in a series of TV interviews on Tuesday, a day before Universal Credit – a key pillar of the social benefits system – is due to cut £20 per week .
His remarks came as gas prices breached £3 a therm for the first time in the UK, while also climbing across Europe. Tuesday’s increase means prices have tripled in the past two months and broader measures of the cost of living are also rising sharply.
Consumer prices rose 3 per cent in the 12 months to August, while the Bank of England expects inflation to reach 4 per cent by the end of the year, potentially right in the middle, say ONS experts. Best estimate of salary increase. 3.2-4.4 percent.
The prime minister told Sky News that supply pressures and rising costs were signs of the global economy “coming back to life very rapidly” after the COVID-19 pandemic.
“People have been worrying about inflation for a very long time, I’m seeing strong economic growth, and by the way, those fears are unfounded,” he said, adding that “supply will outpace demand.”
However, his remarks flew in the face of analysis from economists across the political spectrum and the head of the UK’s energy regulator, Offgame.
Chief among the concerns shared by economists and interest rate setters by the Bank of England is that prices are rising while economic growth shows some signs of halting.
Wage hike measures that show wage increases, and which the prime minister has repeatedly used to justify a tough line of immigration—Brexit, According to independent experts from the Office for National Statistics, the pandemic has been distorted by.
He argues that they do not show a pay increase that is as strong as the use of some of the prime minister’s choice figures. This paints a false positive picture of the decline in wages earlier in the pandemic and the extent of the way the pay rolls are measured amid furloughs and the sudden lockdown.
“This week the public policy discussion has lost all touch with reality,” Torsten Bell, head of think tank The Resolution Foundation, said on Twitter. This was because while wages had risen in some sectors, price increases were taking hold across the economic spectrum, reducing the cost of living, he said.
Meanwhile, Offgame’s chief executive told the Scottish Parliament that raising natural gas prices would be “significantly difficult” for customers. He told the MSP that its effect will be there this winter and beyond.
The energy bill for 15 million homes was set to rise by at least £139, under a price cap introduced in early October, as suppliers struggled with rising wholesale prices following the collapse of several smaller firms. For those consumers on the prepayment meter, the average price will increase by £153.
Natural gas prices have risen sharply this year, adding to pressure on energy suppliers, who haven’t hedged their entire portfolios of customers by locking in fuel prices prematurely and putting some out of business. Is.
OffGame’s CEO, Jonathan Brearley, told Holyrood’s energy committee that “unprecedented changes” in gas prices were “putting on the wholesale market”, but argued that the price cap was still giving customers good value for money. Was.
Mr Brearley said a “range of factors” had “disrupted supply” at the international level.
He added: “There seems to be little more than long-term contracts coming in from Russia and equally there are some problems with some liquefied natural gas (LNG) terminals – which means supply is constrained and demand is higher than you would expect.
“In terms of duration, it’s very hard to tell and we are of the view that we need to have open views about how long this could last, and for multiple scenarios.”
Meanwhile there is hope among some analysts that Russia may Increase your gas supply to Europe To ease the pressure on supplies in winter, at a time of dwindling reserves in the UK and continental Europe, appeared wrong.
According to a report by Reuters news agency, Russian leader Vladimir Putin said the supply crunch in Europe and beyond was the result of “unbalanced decisions” and “drastic steps” to reduce carbon dioxide emissions.
“You see what is happening in Europe. There is frenzy and some confusion in the markets. Why? Because no one is taking it seriously.”
“Some people are speculating on climate change issues, some people are underestimating certain things, some are cutting back on investment in extractive industries. A smooth transition is needed. “
Credit: www.independent.co.uk /