Economy

UK inflation rises to 9.4% for ninth straight month as dwelling disaster worsens – Enterprise Reside | Inflation

Here is our full story on UK inflation. To recap, it hit a fresh 40-year peak of 9.4% last month, higher than the 9.3% expected by economists. Inflation has now risen by nine months in a row, as the cost of living crisis worsens.

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Other countries have also seen big price rises, partly caused by Russia’s invasion of Ukraine, but the UK has the highest inflation rate in the G-7 group of industrialised nations.

“,”elementId”:”fbe96cb9-3465-47f7-b2ac-5b4d98742ce7″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Transport costs were the main culprit, in particular higher prices for petrol and diesel, which reached new records in June. Food prices rose at the highest rate since 2009, as milk, cheese and eggs as well as vegetables, meat and other food products such as ready meals became more expensive.

“,”elementId”:”8ef7de18-ed8a-4d67-8cbb-67db95b2745d”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Bank of England is forecasting that inflation will peak at 11% in the autumn, and its governor said yesterday that a bigger, half-point interest rate hike was on the table in August.

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UK inflation hit a new peak of 9.4% in June, driven by higher fuel and food prices, according to figures from the Office for National Statistics.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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As we are sweltering in the heatwave, and the barometer hit a new record of 40.2 degrees at Heathrow airport yesterday, inflation is also heating up further.

“,”elementId”:”8afa0529-7916-4241-a026-37adc7e9feeb”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The latest official figures, out at 7am, are expected to show a rise in the headline annual rate to 9.3% in June, another record, from 9.1% in May, which was the highest since 1982. The Bank of England expects inflation to reach 11% this autumn.

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Investec economist Ellie Henderson said the driving factors behind the latest pick-up in inflation are fuel costs and airline prices, as well as continued high food inflation, exacerbated by the weaker pound.

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A driving factor behind this is rising fuel prices. More timely data has pointed to an over 9% gain in fuels & lubricant prices in June. We expect airline prices to also show hefty price gains in June due to higher fuel costs, with prices already under upward pressure owing to a burst in demand meeting labour shortages. Finally, given the continued conflict in Ukraine, high food price inflation is likely to have remained in June, exacerbated by a weaker sterling given the UK’s dependence on imported food products. 

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Looking further ahead, the energy outlook is one of, if not the, most substantial factor determining how persistent headline inflation may be. The Ofgem energy price cap will be next adjusted in October, where our utility analysts have forecasted an eye-watering 67% increase to the cap, to £3,285.

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Aside from the energy outlook, recent political events add an extra layer of uncertainty as to how long ‘core’ inflation, excluding food and energy, may persist for. Many of the frontrunners to replace current PM Boris Johnson, former Chancellor Rishi Sunak aside, have promised sweeping tax cuts as part of their leadership campaign. Such tax cuts may help stimulate the economy, but also risk creating more entrenched underlying inflation.

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Inflation has already wiped out wage growth. UK workers suffered a 2.8% real pay cut between March and May (adjusted for inflation and excluding bonuses) – the biggest fall since records began in 2001, according to the Office for National Statistics, as we learned yesterday.

“,”elementId”:”828c8e9e-ee21-4794-b803-b3767c8e1fc5″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

So far, the wage-price spiral feared by central bankers has failed to materialise – instead, there is an intensifying squeeze on living standards as the gap between pay and the cost of living widens.

“,”elementId”:”eaccdc49-b705-4cbe-a5e9-ffed1ca9d24f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But Bank of England governor Andrew Bailey said yesterday that a half-point increase in interest rates was “on the table” for next month, as the central bank considers toughening its anti-inflation stance.

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Michael Hewson, chief market analyst at CMC Markets UK, said:

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The August meeting will also be used for the publication of the central bank’s plans to reduce the size of its balance sheet.

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While this is welcome, it’s also long overdue given the central bank’s previous announcements that inflation could peak at 11% later this year. The central bank clearly needs to do something, they have been tentative and weak all year, watching the currency decline while being wishy washy about whether they have the means to combat some of the threats being posed by the current surge in prices.

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Asian stock markets have advanced, extending a global rally as strong results from US companies and the expected resumption off Russian gas supply to Europe boosted confidence and eased recession fears, while the dollar is at two-week lows.

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The gains were led by Japan’s Nikkei, up 2.5%, while Hong Kong’s Hang Seng rose 1.3% and the Australian market gained 1.6%. Europe’s exchanges are also expected to open higher.

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The Agenda

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  • 1.30pm BST: Canada inflation for June (forecast: 8.4%)
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  • 3pm BST: Eurozone consumer confidence for July
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  • 3pm BST: US Existing home sales for June
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Primary occasions:

Here is our full story on UK inflation. To recap, it hit a fresh 40-year peak of 9.4% last month, higher than the 9.3% expected by economists. Inflation has now risen by nine months in a row, as the cost of living crisis worsens.

“,”elementId”:”885dd96a-b162-41a7-b7d8-efbaa6f2d24d”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Other countries have also seen big price rises, partly caused by Russia’s invasion of Ukraine, but the UK has the highest inflation rate in the G-7 group of industrialised nations.

“,”elementId”:”fbe96cb9-3465-47f7-b2ac-5b4d98742ce7″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Transport costs were the main culprit, in particular higher prices for petrol and diesel, which reached new records in June. Food prices rose at the highest rate since 2009, as milk, cheese and eggs as well as vegetables, meat and other food products such as ready meals became more expensive.

“,”elementId”:”8ef7de18-ed8a-4d67-8cbb-67db95b2745d”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Bank of England is forecasting that inflation will peak at 11% in the autumn, and its governor said yesterday that a bigger, half-point interest rate hike was on the table in August.

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UK inflation hit a new peak of 9.4% in June, driven by higher fuel and food prices, according to figures from the Office for National Statistics.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

“,”elementId”:”b16c5e05-bf09-420e-ba03-f3cf4b91227b”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

As we are sweltering in the heatwave, and the barometer hit a new record of 40.2 degrees at Heathrow airport yesterday, inflation is also heating up further.

“,”elementId”:”8afa0529-7916-4241-a026-37adc7e9feeb”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The latest official figures, out at 7am, are expected to show a rise in the headline annual rate to 9.3% in June, another record, from 9.1% in May, which was the highest since 1982. The Bank of England expects inflation to reach 11% this autumn.

“,”elementId”:”7b30e400-9257-4dc1-82d2-3430602b44dc”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Investec economist Ellie Henderson said the driving factors behind the latest pick-up in inflation are fuel costs and airline prices, as well as continued high food inflation, exacerbated by the weaker pound.

“,”elementId”:”bc43d471-ef12-4b8d-a6c8-c75fe51b0c87″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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A driving factor behind this is rising fuel prices. More timely data has pointed to an over 9% gain in fuels & lubricant prices in June. We expect airline prices to also show hefty price gains in June due to higher fuel costs, with prices already under upward pressure owing to a burst in demand meeting labour shortages. Finally, given the continued conflict in Ukraine, high food price inflation is likely to have remained in June, exacerbated by a weaker sterling given the UK’s dependence on imported food products. 

n

Looking further ahead, the energy outlook is one of, if not the, most substantial factor determining how persistent headline inflation may be. The Ofgem energy price cap will be next adjusted in October, where our utility analysts have forecasted an eye-watering 67% increase to the cap, to £3,285.

n

Aside from the energy outlook, recent political events add an extra layer of uncertainty as to how long ‘core’ inflation, excluding food and energy, may persist for. Many of the frontrunners to replace current PM Boris Johnson, former Chancellor Rishi Sunak aside, have promised sweeping tax cuts as part of their leadership campaign. Such tax cuts may help stimulate the economy, but also risk creating more entrenched underlying inflation.

n

“,”elementId”:”4d0e956c-529e-48e4-b0a0-253302908712″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Inflation has already wiped out wage growth. UK workers suffered a 2.8% real pay cut between March and May (adjusted for inflation and excluding bonuses) – the biggest fall since records began in 2001, according to the Office for National Statistics, as we learned yesterday.

“,”elementId”:”828c8e9e-ee21-4794-b803-b3767c8e1fc5″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

So far, the wage-price spiral feared by central bankers has failed to materialise – instead, there is an intensifying squeeze on living standards as the gap between pay and the cost of living widens.

“,”elementId”:”eaccdc49-b705-4cbe-a5e9-ffed1ca9d24f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But Bank of England governor Andrew Bailey said yesterday that a half-point increase in interest rates was “on the table” for next month, as the central bank considers toughening its anti-inflation stance.

“,”elementId”:”2bac87ea-1046-4c63-acf7-f2c9bdbf64c8″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Michael Hewson, chief market analyst at CMC Markets UK, said:

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n

The August meeting will also be used for the publication of the central bank’s plans to reduce the size of its balance sheet.

n

While this is welcome, it’s also long overdue given the central bank’s previous announcements that inflation could peak at 11% later this year. The central bank clearly needs to do something, they have been tentative and weak all year, watching the currency decline while being wishy washy about whether they have the means to combat some of the threats being posed by the current surge in prices.

n

“,”elementId”:”11f3ab4f-9602-4aed-8d76-b2143f154872″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Asian stock markets have advanced, extending a global rally as strong results from US companies and the expected resumption off Russian gas supply to Europe boosted confidence and eased recession fears, while the dollar is at two-week lows.

“,”elementId”:”f5062477-2698-40c1-8b07-48976f819e82″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The gains were led by Japan’s Nikkei, up 2.5%, while Hong Kong’s Hang Seng rose 1.3% and the Australian market gained 1.6%. Europe’s exchanges are also expected to open higher.

“,”elementId”:”d4782088-56e4-43e7-9376-c3a79fde44d3″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Agenda

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    n

  • 1.30pm BST: Canada inflation for June (forecast: 8.4%)
  • n

  • 3pm BST: Eurozone consumer confidence for July
  • n

  • 3pm BST: US Existing home sales for June
  • n

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Filters BETA

Chancellor of the Treasury Nadim Zahavi mentioned:


International locations around the globe are fighting excessive costs and I understand how onerous it’s for folks right here within the UK, so we’re working along with the Financial institution of England to convey inflation down.

We’ve launched £37 billion value of help for households, together with at the very least £1,200 for 8 million weak households and an increase in private tax charges for greater than 2 million.

Nevertheless, Labour’s shadow chancellor Rachel Reeves mentioned:

The price of dwelling disaster worries households an increasing number of, however what we get from the Tories is chaos, distraction and an unfunded fantasy financial system. Rising inflation could also be pushing household funds to the brink, however Britain’s low pay spiral shouldn’t be all that new.

That is the results of a decade of mismanagement of our financial system, with dwelling requirements and actual wages not rising.

We want greater than a plaster solid to get us again on monitor – we want a stronger, safer financial system.

Inflation within the UK rose to 9.4% within the ninth month – abstract

Here is our full story on inflation within the UK. To sum it up, it hit a brand new 40-year excessive of 9.4% final month, larger than the 9.3% economists had anticipated. Now inflation has risen for 9 months in a row, as the price of dwelling disaster worsens.

Different nations have additionally seen massive worth rises, partly brought on by Russia’s invasion of Ukraine, however the UK has the very best inflation price within the G-7 group of industrialized nations.

Transportation prices, significantly rising gasoline and diesel costs, which hit new data in June, had been a significant factor. Meals costs rose at their quickest tempo since 2009, as milk, cheese and eggs, in addition to greens, meat and different meals merchandise resembling prepared meals grew to become costlier.

The Financial institution of England predicts inflation will peak at 11% within the autumn, and its governor mentioned yesterday {that a} additional half-point price hike was on the desk in August.

Inflation of goods
Inflation of products Picture: ONS

Liberal Democrat Treasury spokeswoman Sarah Olney mentioned households and pensioners had been going through relentless worth rises whereas the federal government stood by.

Britain now has a zombie authorities in the midst of a life disaster. The nation can now not await this conservative get together to carry its personal horrible management contest.

VAT should be lowered instantly to scale back costs on the counters and gasoline pumps.

As an alternative, persons are struggling day by day from Rishi Sunak’s tax hike and are left with none lively authorities when he proclaims a hike in electrical energy costs subsequent month. Britain deserves higher than this.

Costs charged at eating places and lodges rose 8.6% within the yr to June, up from 7.6% in Might and the very best since August 2021. Clothes and footwear costs rose at a slower tempo of 6.1%, down from 6.9% in Might, however there was little proof of the discounting that normally happens in summer season gross sales. ONS mentioned:

Costs normally fall presently of yr after the beginning of the summer season promoting season, however 2022 noticed little motion and in 2021, costs continued to rise after the tip of the coronavirus lockdown.

Clothes and shoes
Garments and sneakers Picture: ONS

Meals and non-alcoholic drinks rose 9.8% within the yr to June, the very best since March 2009. Milk, cheese and eggs, in addition to greens, meat and different meals merchandise, resembling prepared meals, grew to become costlier.

Helen Dickinson, chief government of the British Retail Consortium, mentioned:

Inflation continues to rise, brought on by rising manufacturing prices. Meals costs have been hit onerous by rising world commodity costs and rising feed and fertilizer costs, exacerbated by the conflict in Ukraine. Globally, non-food merchandise are affected by transport and dealing with prices, whereas rising vitality costs make purchasing costlier.

With growing pressures on provide chains and operations, retailers are doing their finest to soak up as many of those prices as attainable and search efficiencies of their enterprise. Retailers are increasing their worth ranges to cater to these most in want, providing reductions to weak teams and growing worker wages. Till inflation comes down, it will likely be a tricky highway for households and companies within the UK.

Inflation: CPI 9.4% up from 9.1%, highest since Feb 1982. Final time it rose by way of this stage July 1979. Then it stayed in double figures for 2yrs 8months.
RPI 11.8% up from 11.7% highest since Feb 1982
CPIH which no-one makes use of 8.2% up from 7.9%

— Paul Lewis (@paullewismoney) July 20, 2022

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Inflation: CPI 9.4% from 9.1%, the very best since February 1982. It final rose to this stage in July 1979. Then it remained in double digits for two years and eight months.
RPI 11.8% from 11.7% highest since February 1982
CPIH that nobody makes use of is 8.2% from 7.9%

— Paul Lewis (@paullewismoney) July 20, 2022

Rising costs for motor gasoline and meals had been the most important contributors to the rise in inflation, as petrol and diesel costs hit new data, the ONS mentioned. In June, transport prices elevated by 15.2% in whole.

Gasoline and diesel costs rose 42.3%, the quickest price since 1989. The common worth of gasoline in June was 184 p/liter, which is the very best in comparison with 129.7 paliter a yr in the past. The common worth of diesel can also be the very best, which is 192.4 p. per liter.

In June, the inflation price in Nice Britain reached 9.4%

UK inflation hit a brand new excessive of 9.4% in June, pushed by rising gasoline and meals costs, in line with the Workplace for Nationwide Statistics.

In the event you’re questioning why Britain’s roads are melting within the warmth and the rails are warping, this is a helpful perception.

However with temperatures as little as 10C in some areas right this moment, heavy rain and thunderstorms are forecast for components of northern England and southern Scotland, which may trigger additional disruption.

Hewson added:

It’s true that nobody may have predicted Russia’s aggression towards Ukraine and its influence on the world financial system; The central financial institution’s procrastination preceded when it was clear inflation was beginning to kick in. Now that we’re seeing it transfer to meals costs, it is changing into clearer than ever that inflation is rather more sustainable after the most recent Kantar information confirmed meals costs rose 9.9%.

That is anticipated to be mirrored in right this moment’s June CPI figures, that are anticipated to rise from 9.1% to a brand new document excessive of 9.3%, though core costs could return to five.8%.

Virtually half of the rise in headline costs [consumer price index] It’s mirrored within the improve within the worth of gasoline, electrical energy and gasoline, which accounted for greater than 4% of the rise in Might. That is anticipated to proceed into June, and whereas expectations are for an increase to 9.3%, there’s a danger we may go even larger if final week’s massive spike within the US is any information.

The image is not any higher on the outdated RPI [retail price index] measure that reached 11.7%, whereas the PPI [producer pice index] Commodity costs hit a brand new document excessive of twenty-two.1% in Might and are anticipated to rise additional to 23%.

Introduction: Inflation hits new excessive in UK as gasoline, meals costs rise

Good morning and welcome to our submit on enterprise, the worldwide financial system and monetary markets.

As we indulge in a heatwave, with the barometer at Heathrow airport hitting a brand new document excessive of 40.2 levels yesterday, inflation can also be on the rise.

The most recent official figures, launched at 7 a.m., count on the annual headline price to have risen to 9.3 % in June, one other document excessive from 9.1 % in Might, which was the very best since 1982. The Financial institution of England expects inflation to succeed in 9.3%. 11% this fall.

Investec economist Ellie Henderson mentioned the components driving the current rise in inflation had been gasoline prices and airline fares, in addition to continued excessive meals inflation, exacerbated by the weak pound.

The driving issue for that is the rise in gasoline costs. Well timed information confirmed a greater than 9% improve within the worth of gasoline and lubricants in June. We count on airline fares to additionally present important worth will increase in June resulting from larger gasoline prices, and fares are already beneath upward strain resulting from elevated demand and labor shortages. Lastly, given the continued battle in Ukraine, meals worth inflation is prone to stay excessive in June, fueled by a weaker sterling resulting from Britain’s reliance on imported meals. 

Wanting forward, the vitality outlook is likely one of the most necessary components in figuring out how sustainable headline inflation could be. Ofgem’s minimal vitality worth will probably be adjusted subsequent October, the place our service analysts have predicted a eye-watering 67% rise to a minimal of £3,285.

Along with the vitality outlook, current political occasions have added a further layer of uncertainty about how lengthy “core” inflation, excluding meals and vitality, will stay. Most of the contenders to switch present prime minister Boris Johnson, former chancellor Rishi Sunak, have promised main tax cuts as a part of their management marketing campaign. Such tax cuts will help stimulate the financial system, but additionally run the chance of making extra underlying inflation.

Inflation has already worn out wage development. Based on the Workplace for Nationwide Statistics, as we discovered yesterday, UK employees took a 2.8% actual pay minimize (adjusted for inflation and excluding bonuses) between March and Might – the most important drop since data started in 2001.

Up to now, the wage-price spiral feared by central bankers has not materialized – as a substitute, there may be growing strain on dwelling requirements because the hole between wages and the price of dwelling widens.

However Financial institution of England Governor Andrew Bailey mentioned yesterday {that a} half-point rate of interest hike was “on the desk” for subsequent month because the central financial institution tightens its anti-inflation stance.

Michael Hewson, chief market editor at CMC Markets UK, mentioned:

The August assembly may also be used to publish the central financial institution’s plans to scale back the dimensions of its steadiness sheet.

Whereas that is welcome, it’s also lengthy overdue, given earlier bulletins by the Central Financial institution that inflation may rise to 11% later this yr. The central financial institution clearly must do one thing, they’ve been dovish and dovish all yr and have seen the trade price fall, whereas debating whether or not or not they’re able to take care of among the threats posed by the present price hike. they chorus.

Asian inventory markets superior and prolonged a worldwide rally as sturdy U.S. company outcomes and an anticipated revival in Russian gasoline shipments to Europe boosted confidence and eased recession fears, whereas the greenback hit a two-week low.

Japan’s Nikkei gained 2.5%, whereas Hong Kong’s Dangle Seng gained 1.3% and the Australian market gained 1.6%. European bourses are additionally anticipated to open larger.

Diary

  • 13:30 BST: Canadian inflation in June (forecast: 8.4%)
  • 15:00 BST: Eurozone shopper confidence for July
  • 15:00 BST: US current residence gross sales for June

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