https://www.ft.com/content/64db3dcf-23ff...84675b596b
UK braced for prolonged period of stagflation
Analysts warn of anaemic economic growth, even contraction, alongside soaring inflation
The risk of a prolonged period of stagflation in the UK has increased after consumer prices surged more than expected while economic growth slowed to a crawl.
Recent official and informal economic data have fallen short of analysts’ expectations, prompting many to warn about stagflation and even an economic contraction in the second quarter of this year.
It comes as some experts say the government has not done enough to help households with the cost-of-living crisis resulting from soaring consumer price inflation. Opposition parties in parliament have also accused chancellor Rishi Sunak of providing inadequate support to Britons grappling with rising energy and food bills.
Stagflation, which refers to slow growth in gross domestic product coupled to high inflation, is a relatively rare economic situation that puts great strain on consumers and businesses.
Last week, official data showed that consumer prices increased at an annual rate of 7 per cent in March, the fastest pace since 1992. By contrast, growth in gross domestic product slowed to just 0.1 per cent in February, and real wages, adjusted for inflation, contracted by 1 per cent.
The figures “highlight the risk of a stagflation-like episode for the UK economy”, said Paul Hollingsworth, economist at the consultancy BNP Paribas Markets 360.