14:58
Traffic jam:   4
$
92.2628
99.7057

UK inflation at 10-year high sets stage for interest rate rise within weeks

17 November 2021
2577
3 min.
5
UK inflation at 10-year high sets stage for interest rate rise within weeks

Britain looks set to become the first major economy to hike interest rates since the Covid-19 pandemic began after inflation data showed prices rising at the fastest rate in a decade.

Driven by higher energy and transport costs, the UK Consumer Prices Index rose by 4.2% in the year to October, according to official data released Wednesday. That's the biggest jump in the index since November 2011.

A rapid recovery in demand following the easing of Covid-19 restrictions, shortages of goods and workers and soaring energy costs are pushing up prices around the world. The United Kingdom is also feeling the fallout from Brexit, which adds to the cost of doing business with the European Union, its biggest trading partner.
 
But the October inflation data was even higher than analysts were expecting. The pound edged up against the US dollar and hit its highest level against the euro since February 2020 as investors bet on an increase in UK interest rates.

"The upside surprise in the October inflation data supports our expectation that the Bank of England will hike the bank rate by 15 basis points to 0.25% at its next monetary policy committee meeting on 16 December," wrote Kallum Pickering, senior economist at Berenberg, in a research note.

Higher official interest rates can raise the cost of borrowing for businesses and households, as well as encouraging people to save more, thereby taking some of the heat out of inflation.

The Bank of England slashed interest rates to a record low of 0.1% in March 2020 as part of a package of emergency measures to shore up the economy after activity collapsed because of the pandemic.

Investors had been expecting the central bank to begin to raise rates when it met earlier this month. Instead, it opted to stay the course as it waited for more data on the job market, concerned that unemployment could rise as UK government support for employers lapsed.

Some of those concerns about jobs are likely to have been assuaged by news Tuesday that UK unemployment fell to 4.3% in September even as the country's furlough program ended.

"When coupled with yesterday's decent labor market release, the bigger-than-expected leap in CPI inflation in October makes an interest rate hike in December even more likely," said Paul Dales, chief UK economist at Capital Economics.

Inflation is now running at twice the Bank of England's 2% target level, while economic growth is slowing, raising the specter of a period of "stagflation." The central bank's own chief economist has already warned that inflation could surge above 5% in early 2022.

Transport costs played a big part in the latest inflation spike. The UK Office for National Statistics said Wednesday that average gasoline prices — which hit a record high late last month — jumped by 22% in the year to October to 138.6 pence per liter (about $8.50 per gallon).

Source: https://edition.cnn.com/2021/11/17/economy/uk-inflation-interest-rates/index.html

Persons1 and Companies4 in the news

Section:

Discussion

Rating companies
ITV
16 Mention
Instagram
16 Mention
Daily Mail
8 Mention
The Labour Party
8 Mention
Netflix
7 Mention
BBC One
6 Mention
Labour Party
6 Mention

ENGLAND NEWS


News GlobalEng.biz -this is the latest and most up-to-date information about the resonant events that have occurred in the region. The task of the resource's news feed is to convey to readers information about important events in business, politics, economics, healthcare, culture and other spheres of life in England with maximum accuracy and objectivity.
News GlobalEng.biz - this is coverage of the economic processes taking place in England, the latest news of public life, incidents and an overview of political events. English news is information about the activities of small and medium-sized businesses, the work of housing and communal services, the implementation of significant projects. The site's journalists describe not only the life of the region, but also talk about the current state of the English economy. Everything you need to know about innovations in the field of industry and agriculture, economy and government is collected in the "News" section on GlobalEng.biz.
News of England promptly informs the reader, shows the real picture and opens up topical topics. Communication with government structures and business gives us the opportunity to provide our readers with reliable, information-rich material.
The main page of the portal contains the key news of England!
Alena Potapova

Development Director
Population
8112877048
Died this year
14420834
Born this year
35477804