Index Investing News
Sunday, May 25, 2025
No Result
View All Result
  • Login
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
No Result
View All Result
Index Investing News
No Result
View All Result

Stubborn UK inflation piles pressure on Bank of England to raise rates

by Index Investing News
June 21, 2023
in Economy
Reading Time: 5 mins read
A A
0
Home Economy
Share on FacebookShare on Twitter


UK inflation remained stuck at 8.7 per cent in May, worse than the 8.4 per cent expected, raising pressure on the Bank of England to increase interest rates.

Wednesday’s data marked the fourth month in a row that price rises have exceeded forecasts, adding to the gloom afflicting rate-setters, Rishi Sunak’s government and many households.

The Institute for Fiscal Studies think-tank said interest rate increases over the past year were already on track to absorb 8.3 per cent of mortgage holders’ disposable income — a figure that rises to 20 per cent for 1.4mn people.

The BoE is set to raise rates on Thursday by at least 0.25 percentage points to 4.75 per cent, but traders now put the odds of a larger 0.5 percentage point rise as high as 40 per cent and predict a peak of 6 per cent early next year.

Despite the higher rates expectations, sterling fell as much as 0.5 per cent against the dollar to $1.2692 on growing recession fears, although it later recouped most of those losses.

“We have an inflation problem that is not associated with economic growth,” said Lyn Graham-Taylor, a senior rates strategist for Rabobank. “The market is saying that the Bank of England will have to push the UK economy into recession to get on top of this problem.” 

Analysts said there was next to no good news in the inflation data. Core inflation, which excludes volatile food and energy prices, rose again in May to 7.1 per cent from 6.8 per cent the previous month, the highest rate since March 1992. Services prices were also up 7.4 per cent, also the highest rate in more than 30 years.

Recommended

Paul Dales, chief UK economist at Capital Economics, said the BoE would have to “fight tougher” to bring down inflation because “the acceleration in core inflation leaves the UK looking increasingly like the global outlier and the stagflation nation”.

Kitty Ussher, chief economist at the Institute of Directors, the business lobby group, said the only question for the BoE now was how much to increase the cost of borrowing.

She said the failure of inflation to come down was probably caused by “the continuing impact of high energy costs and strong wage pressure being passed through to prices, all overlaid with high demand for leisure activities among households with disposable incomes”.

Two-year gilt yields hit 5.1 per cent in early trade, their highest level since 2008, before easing to 5.03 per cent.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


In the detail of the figures, price rises again easily offset price cuts, with significant increases in the cost of air fares, package holidays, live music events, games and toys. These were partially offset by falling prices for petrol and diesel.

Food price inflation dipped from 19 per cent in April to 18.3 per cent in May, but the cost of food in supermarkets still rose 0.9 per cent in the month of May alone.

The UK’s inflation rate of 8.7 per cent in May compared poorly with that seen in other countries. The equivalent figures are 6 per cent in France, 6.3 per cent in Germany, 7.1 per cent across the whole of the EU and 2.7 per cent in the US, using the most comparable measure.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


Chancellor Jeremy Hunt acknowledged the numbers were difficult for families and businesses across the UK and challenging for the government.

“We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living,” he said.

But the increase in interest rates is posing increasing challenges for the government.

Recommended

Montage of Sarah Pennels, Claer Barrett and Adrian Anderson and an aerial shot of some houses

The analysis by the IFS think-tank on Wednesday indicated the latest shifts in the mortgage markets will push up mortgage holders’ payments on average by £280 a month — which translates into 8.3 per cent of their disposable income — relative to March 2022.

The IFS added that for about 1.4mn people — half of whom are under 40 — mortgage payments will jump by at least 20 per cent of their disposable income.

Adding to fears for the UK outlook, net government debt rose above 100 per cent of gross domestic product for the first time since 1961, separate data on Wednesday showed.

Additional reporting by Valentina Romei



Source link

Tags: BankEnglandinflationpilespressureraiseratesstubborn
ShareTweetShareShare
Previous Post

Stressed and Distressed Credit: Risk and Reward

Next Post

Ripple CTO: Federal Judges Echo Public Frustration Toward SEC

Related Posts

How is the Federal Reserve reacting to Donald Trump’s commerce conflict?

How is the Federal Reserve reacting to Donald Trump’s commerce conflict?

by Index Investing News
May 25, 2025
0

Unlock the White Home Watch publication at no costYour information to what Trump’s second time period means for Washington, enterprise...

SoftBank’s Masayoshi Son floats thought of US-Japan sovereign wealth fund

SoftBank’s Masayoshi Son floats thought of US-Japan sovereign wealth fund

by Index Investing News
May 25, 2025
0

Unlock the White Home Watch e-newsletter without costYour information to what Trump’s second time period means for Washington, enterprise and...

Donald Trump makes dangerous guess by rekindling his commerce conflict with the EU

Donald Trump makes dangerous guess by rekindling his commerce conflict with the EU

by Index Investing News
May 24, 2025
0

Donald Trump likes to make offers. And he could also be calculating that his sudden escalation of tariffs on the...

The Fed’s not making a revenue

The Fed’s not making a revenue

by Index Investing News
May 24, 2025
0

Unlock the Editor’s Digest free of chargeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.The...

Trump’s subsequent 100 days

Trump’s subsequent 100 days

by Index Investing News
May 24, 2025
0

This week, Swamp Notes goes to London for a dwell recording. Katie Martin, host of the Unhedged podcast, and Chris...

Next Post
Ripple CTO: Federal Judges Echo Public Frustration Toward SEC

Ripple CTO: Federal Judges Echo Public Frustration Toward SEC

Chicago Fed President Goolsbee says decision to skip rate hike was ‘close call’

Chicago Fed President Goolsbee says decision to skip rate hike was 'close call'

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED

Stars Arena secures funding to plug M shortfall following exploit, will reopen after security audit

Stars Arena secures funding to plug $3M shortfall following exploit, will reopen after security audit

October 8, 2023
Monster Beverage Company (MNST) Earnings: 1Q25 Key Numbers

Monster Beverage Company (MNST) Earnings: 1Q25 Key Numbers

May 12, 2025
Israeli startups panic as SVB share price plunges

Israeli startups panic as SVB share price plunges

March 12, 2023
Golden Knights challenged to say uncommon highway win vs. Penguins

Golden Knights challenged to say uncommon highway win vs. Penguins

March 11, 2025
The Probability of Tesla Going Bankrupt

The Probability of Tesla Going Bankrupt

December 19, 2022
China’s prime legislation corporations poach companions from US rivals

China’s prime legislation corporations poach companions from US rivals

March 24, 2025
“If the Crypto Bubble Bursts, No One Will Come for Compensation,” Consob Commissioner

“If the Crypto Bubble Bursts, No One Will Come for Compensation,” Consob Commissioner

November 24, 2024
Palestinian Americans struggle to hear from their families in Gaza

Palestinian Americans struggle to hear from their families in Gaza

October 15, 2023
Index Investing News

Get the latest news and follow the coverage of Investing, World News, Stocks, Market Analysis, Business & Financial News, and more from the top trusted sources.

  • 1717575246.7
  • Browse the latest news about investing and more
  • Contact us
  • Cookie Privacy Policy
  • Disclaimer
  • DMCA
  • Privacy Policy
  • Terms and Conditions
  • xtw18387b488

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In