* UK April inflation rate likely highest in G7
* Household energy bills drive up inflation
* Anti-poverty campaigners demand government action
* Inflation likely to rise further
LONDON, May 18 (Reuters) - British inflation surged last
month to its highest annual rate since 1982, pressuring finance
minister Rishi Sunak to offer more help for households and the
Bank of England to keep raising interest rates despite a risk of
Consumer price inflation hit 9% in April, the Office for
National Statistics said on Wednesday, surpassing the peaks of
the early 1990s recession that many Britons remember for
sky-high interest rates and widespread mortgage defaults.
Britain has the highest inflation of Europe's big economies
and almost certainly in the Group of Seven, with Canada and
Japan yet to report April data. Neither are likely to match
Britain's price growth which also looks set to be
Last month, the International Monetary Fund forecast
Britain in 2023 faced slower economic growth and more persistent
inflation than any other major economy.
Soaring energy bills were the biggest inflation driver,
reflecting April's increase in regulated energy tariffs.
Knock-on effects from Russia's invasion of Ukraine mean those
bills are likely to jump again in October.
"We cannot protect people completely from these global
challenges but are providing significant support where we can,
and stand ready to take further action," Sunak said.
A Reuters poll of economists had pointed to a reading of
9.1%, up from 7.0% in March, and sterling fell.
Households face the biggest cost-of-living squeeze since
records began in the 1950s, Britain's budget forecasters say,
and consumer confidence has sunk towards all-time lows.
Anti-poverty campaigners urged Sunak to act now, starting
with an immediate increase in welfare benefits.
"(Sunak's) inaction will make an already desperate situation
for many even worse," Rebecca McDonald, senior economist at the
Joseph Rowntree Foundation which campaigns for lower-income
A survey on Tuesday showed two in three people had kept
their heating off when they would normally have turned it on,
almost half were driving less or changing supermarkets and just
over a quarter say they have skipped meals.
Food prices rose by nearly 7% in the 12 months to April, the
On Monday, BoE Governor Andrew Bailey told lawmakers food
price rises were a major worry as he apologized for "being
apocalyptic for a moment."
While the government points to its 22 billion-pound ($27.4
billion) package of support for households so far, much of this
is canceled out by recent tax increases on workers.
The Times newspaper said Sunak was drawing up plans to cut
taxes and increase home heating benefits by hundreds of pounds.
An increase in prices charged by restaurants and cafes, as
value-added tax rates went back to their pre-pandemic levels in
April, added to the inflation jump last month.
WORSE TO COME
The BoE this month forecast inflation would top 10% later
this year and investors expect the central bank will add to the
four interest rate increases it has implemented since December,
taking its Bank Rate to 1%, the highest since 2009.
Bank of America this week criticized the BoE for not being
clear about its response, potentially leaving it vulnerable to
political attacks and the economy in a worse situation.
"The BoE reaction function has become less transparent and
monetary policy more at risk of perceived politicization," it
said in a report. "As a result inflation expectations may be
less anchored so we expect higher interest rate, growth and
A former Conservative defense minister, Liam Fox, last week
accused the BoE of failing to spot the inflation surge coming
and the Sunday Telegraph newspaper reported that current
ministers, whom it did not name, were also critical.
Sunak told parliament on Tuesday that, despite the current
challenges, "the record of 25 years of central bank independence
speaks for itself."
Retail price inflation - which the ONS says is no longer
accurate but is widely used in commercial contracts and to set
interest payments on inflation-linked government bonds - jumped
to 11.1%, also the highest since 1982.
There were signs of further inflation pressure ahead.
Manufacturers suffered the joint biggest increase on record in
raw materials prices, up 18.6%, matching March's high.
Factories increased prices by 14.0% over the 12 months to
April, the biggest jump since July 2008.
(Editing by John Stonestreet and Alison Williams)