British inflation is forcing the Bank of England to continue raising its interest rate to 4.5% for the 12th time in a row. Economists are expecting further hikes in the upcoming meetings.
As per the latest reports, UK inflation has come down to less than 10% in the last month of April 2023. This happened as energy prices retreated and Russia’s invasion of Ukraine began to have a waning effect on the annual consumer price comparison.
Earlier on Wednesday, May 24, the Office for National Statistics said headline CPI inflation eased year-on-year to 8.7%. This was a massive decline of 10.1% in March. However, it was still above the consensus estimate of 8.2% polled by economists by Reuters. In its report, the Office for National Statistics (ONS) said:
“Prices of electricity and gas contributed 1.42 percentage points to the decline in annual inflation in April as last April’s increase was factored out in the annual comparison, but this component still contributed 1.01 percentage points to annual inflation. Food and non-alcoholic beverages prices continued to increase in April and contributed to higher annual inflation, however, the annual inflation rate for food and non-alcoholic beverages declined from 19.2% in the year to March 2023 to 19.1% in the year Done. By April 2023.
In addition, consumer prices increased by 1.2% on a monthly basis, above the consensus estimate of 0.8%. For the 12-month period through April 2023, the consumer price index that includes the cost of owner-occupied housing (CPIH) rose 7.8%. In addition, the core CPI increased to 6.8% from 6.2% in March. This will be a major point of concern for the British Central Bank.
As we know, British inflation is forcing bank of england To continue with the interest rate hike of 4.5% for the 12th time in a row. Economists are expecting further hikes in the upcoming meetings as inflation in the UK remains stable compared to other major economies.
BoE will continue its fight against inflation
With inflation stagnating and the labor market tight, Andrew Bailey, governor of the Bank of England, recently warned about a wage-price spiral. On Tuesday, Bailey acknowledged the bank’s failure to properly forecast the strength of inflation.
Commenting on the recent development, British Finance Minister Jeremy Hunt said the falling headline rate was “welcome news” but “there are things beneath those numbers that show this battle is not over”.
Hunt said that we still have a long way to go. Economists expect headline inflation in the UK to fall further in the summer. Energy regulator Ofgem is likely to reduce its energy price cap from July, reducing bills. Suren Thiru, director of economics at the Institute of Chartered Accountants in England and Wales, Said,
“April’s drop in inflation is big enough for the Monetary Policy Committee to keep interest rates on hold next month, but if they continue to tighten further, it could lead to a cost-of-living crisis and pressure on businesses. “
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