Forecaster warns that the rapid pace of price increases is ‘entrenched’.

A succession of economic shocks have also “ratcheted up” public debt, according to the forecaster’s chair.

Price increases are becoming “persistent” and “embedded,” according to Richard Hughes, causing the Bank of England to hike interest rates.

According to him, this means the UK would have to pay higher interest on its public debt.

The government borrows money over a period of years to support some of its spending.

The federal government’s debt has reached its greatest level since the early 1960s. Interest rate increases to contain inflation mean the government is paying more to service its debt than at any time since the late 1980s.

The forecaster, the Office for Budget Responsibility (OBR), was commenting on its study earlier this week, which pointed to rising expenditures associated with an aging society. The OBR described the government as being in a “vulnerable position” as a result of this.

Mr Hughes, the OBR’s chairman, told the BBC’s Today programme that “getting a grip on inflation is really important,” owing to the impact on the public finances.

He claims that the government has racked up a lot of debt as a result of the 2008 financial crisis, the Covid epidemic, and subsequently increasing energy prices.

Rising prices, or inflation, can assist reduce the real worth of a country’s debt.

However, about a quarter of the UK’s debt is index-linked, which means that interest payments climb in line with inflation, according to Mr Hughes. As a result, inflation is less beneficial to the public budget.

Furthermore, during the financial crisis and epidemic, the Bank of England used a practice known as “quantitative easing” to pump hundreds of billions of pounds into the economy.

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