NYN | News
Data released by the UK’s Office for National Statistics revealed that the inflation rate in the United Kingdom rose to 2.2% in July, driven by a series of economic shocks, the latest being the effects of the Red Sea crisis on the country’s supply chains.
According to a report published by *Reuters* on Wednesday, the inflation rate was expected to reach 2.3% based on a survey of economists conducted by the agency. The core inflation rate stood at 2% in May and June, with the Red Sea crisis continuing to impact the British economy.
This increase in inflation follows other economic data released on Tuesday showing that the average wage in the UK, excluding bonuses, rose by 5.4% year-on-year between April and June, the lowest level in two years. The unemployment rate fell to 4.2%, down from 4.4% between March and May, which was lower than expected.
These economic developments come as the Bank of England lowered interest rates this month for the first time in over four years, reducing them to 5% from a 16-year high of 5.25% since August 2023.
The British economy has been hit by a series of successive shocks, starting with the accumulation of public debt, which rose from 64.7% of GDP 15 years ago to 96.5% in 2024, the highest debt level recorded in Britain since 1960. The country has also seen economic growth decline to 1.2% since the Conservative Party came to power and a drop in public investment by more than $639.77 billion during their tenure, according to the UK’s Institute for Public Policy Research.
Following this, the British economy suffered negative effects from Brexit, with the country recording a sharp decline in trade volume by over 15% compared to other G7 nations, according to Goldman Sachs. Then came the Red Sea crisis, which led to increased British defense spending due to its involvement in US-led attacks on Yemen to protect Israel and support its war in Gaza.
In this context, the British Chambers of Commerce (BCC) warned in May of serious repercussions for the UK economy due to supply chain disruptions following the Red Sea crisis. It noted that more than 53% of manufacturers and retailers in the UK were significantly affected by a 300% increase in container rental costs and delivery delays.
A new BCC survey also indicated that Houthi operations in the Red Sea against Israeli, American, and British ships have led to inflation tripling in the UK, adding pressure on consumers. The study warned that if the crisis continues, it could lead to the bankruptcy of some retailers.
