inflation has quickened<\/a> faster than expected. It is expected to stay well above the Bank of England’s target level until autumn.<\/p>\nFor consumers, still reeling from years of higher prices and a recent pickup in food prices, the new number is less a surprise, more the confirmation of their ordinary day-to-day challenges.<\/p>\n
On top of that, and just as important for some people, the bounce in inflation complicates the Bank’s rate cut plan. <\/p>\n
Investors have been treating it as pretty much nailed on that rates will come down again in August, from the current 4.25%.<\/p>\n
Now there is definitely a sense of renewed caution.<\/p>\n
A former rate setter at the Bank, the economist Andrew Sentance, even said it would be “irresponsible” for interest rates to be cut next month.<\/p>\n
Expectations remain that the cut in August and another one later in the year will go ahead. <\/p>\n
But the Bank will have to explain why it is looking beyond this current rise in inflation, into next year’s expected drop-back to the 2% target.<\/p>\n
It will mean the return of old questions around whether the UK is more inflation-prone than other countries, for example because of increasing wage and tax costs being passed on in the form of higher prices.<\/p>\n
A weakening jobs market is another part of the deliberations. The latest employment figures will be published on Thursday.<\/p>\n
If, as expected, they show a continued fall in vacancies, then that strengthens the argument for going ahead with a cut in rates. Bloomberg is predicting a 4.9% unemployment rate, up from the 4.6% reported last month.<\/p>\n
But as always it is important to keep all the figures in perspective. <\/p>\n
True, other major economies have not seen a similar bounce in inflation. The eurozone’s latest inflation rate is just 2%. But inflation is nowhere near the highs of the energy crisis, and will come down as energy prices fall in the autumn. <\/p>\n
Growth is definitely slowing, but we are not in recession, and the very latest activity figures suggest recovery in some sectors.<\/p>\n","protected":false},"excerpt":{"rendered":"While the economy started this year strongly, Wednesday saw another example of a surprise to the markets in…\n","protected":false},"author":2,"featured_media":268412,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-268411","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114866730072788990","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/268411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=268411"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/268411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/268412"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=268411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=268411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=268411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}