UK inflation is 2% above the Bank of England target by the end of the year
UK inflation rose again in May, surpassing forecasts from economists and the Bank of England targets.
As the country went through the phase of reopening, prices for clothing, fuel and meals in restaurants have been pushed up.
– Advertising –
The National Bureau of Statistics said on Wednesday that the prices of consumer goods rose 2.1% for the year through May. This is up from 1.5% in April.
The inflation figure was expected to be at 1.8%.
ONS Chief Economist Grant Fitzner said: “Inflation rate rose again in May, exceeding 2% for the first time since the summer of 2019.
“This month’s rise was driven by fuel prices, which fell this year, but this year has jumped thanks to rising oil prices. Clothing prices are upwards as discounts fell in May. I put pressure on it.”
Inflation is currently at its highest point even before the pandemic, and could lead to demands for interest rates to rise.
Paul Craig, portfolio manager of quilter investors, commented on the impact of inflation numbers today.
“Inflation is in UP and violates the Bank of England’s 2% target, but we are hesitant to respond by reducing the stimulus they provided and quantitative easing that has become very addictive to the market. Now So this could probably be the right decision, because we expect much of the inflation to be temporary. It appears that wage increases are coming, but once again this data is trustworthy. It’s been very skewed by the Furlough scheme, which is not considered a possible indicator,” Craig said.
Craig added that current levels of inflation have the most impact on the poorest households.
“Unfortunately, much of the inflation is poor inflation, struggling with low-income households in pockets. It is still unclear how long these price increases have continued. Inflation pressures are the ones that pent-up demand. Will it be self-destructive or resolved as it dissipates or is filled with increased supply? However, if it is maintained, it risks making the recovery even more uneven than it already, and therefore its recourse As it continues on the Bering Agenda, it will eventually fall to the government to pull the fiscal lever.”
