Another month, another increase in inflation for the United Kingdom. The latest figures from the Office for National Statistics (ONS) report that inflation in the UK is now at 9.4%.
The data shows higher fuel and food prices continuing to push the cost of living up, with new price records per litre for both petrol and diesel. The breakdown of the figures shows a 15.2% rise in transport costs for the month. House prices are also up, though the data lags a little so the 12.8% increase reported is for May.
Christine Lagarde, President of the European Central Bank (ECB), gave an underwhelming speech today in which she dubbed inflation “undesirably high” but states that it should ease eventually – hardly a reassuring statement to the millions currently struggling with rapidly increasing bills.
Such dramatic price hikes are leading to strike action, and with Prime Minister Boris Johnson set to step down as leader we could see the new incumbent put under immediate pressure to deal with an angry workforce demanding fairer pay. There has been no general strike in the UK since 1926, but if the autumn’s energy price forecasts are to be believed… the British public could see energy have increased in cost by over 200% in little over a year.
The inflation news triggered a 0.1% boost to the pound sterling versus the US dollar, with analysts now pricing in a half percentage point rise to interest rates when the Bank of England announces the minutes of its August meeting of the Monetary Policy Committee (MPC). To date, the MPC has voted consistently in favour of steady quarter percentage point rises, but this might change given the circumstances.
Indeed, many outside of government and the BoE are angry at the lack of action in 2021. Inflation dubbed transitory is now running riot across Europe and the US, but particularly painfully in the UK given the unfortunate timing of Brexit. Will the Bank of England be able to stop the rot? Or will inflation punish the British public into 2023?