UK finance minister Jeremy Hunt warns inflation remains far too high

LONDON — U.K. Finance Minister Jeremy Hunt signaled the nation’s inflation remains too high, a day after the Bank of England agreed its 12th consecutive interest rate hike in a bid to combat stubbornly high household prices.

“I think we are aware there is still a long way to go. We still have inflation that is too high, growth is still not as high as we would like it to be,” he told CNBC’s Martin Soong on Friday, hours after the latest official data showed the UK economy eked out 0.1% growth in the first quarter.

“I think the U.K. is back and those are numbers that no one would have predicted even three months ago. These are much higher growth projections,” he noted of the first-quarter print, nevertheless flagging ongoing concerns over labor supply, productivity rates and how to increase long-term growth.

He defended that U.K. economic performance has been impacted by macro-economic concerns, citing a “once-in-a-century pandemic and an energy price shock that is probably the biggest since the 1970s.”

The Covid-19 pandemic has led to severe global logistical and production bottlenecks, while sanctions following Russia’s full-scale invasion of Ukraine in February last year have deprived Western consumers of Moscow’s fuel supplies.

Hunt stressed his support of the Bank of England’s Thursday decision to increase interest rates by a further 25 basis points despite the latest GDP results, arguing the measure will counter the “fundamental instability” triggered by high inflation.

The successive spring collapse of several international banks, including Europe’s Credit Suisse, had brought into question whether central banks would begin to ease their policies of rapidly raising interest rates.

“I think we all believe, certainly we in the U.K. believe, that the most important thing we need to do is focus on getting inflation down,” Hunt underlined. “Once inflation is down and you have stability, you can start to get growth up.”