Inflation in the United Kingdom underwent an unexpected jump last month boosting speculation that rate hikes will happen earlier than what was previously scheduled.
According to market data, the annual rise of consumer prices up until June went up to the year’s highest level of 1.9%. While an increase in prices was present across a majority of goods and services in the UK, among the biggest contributors to the increased rate were prices of food and clothing. This comes as a surprise especially since supermarkets had initially engaged in a competition on who can offer the largest discount and the pound sterling strengthened reducing import costs.
The Bank of England (BoE) currently holds a target inflation rate of 2% which has been one of the primary reasons why it has persisted on maintaining interest rates at their current record low. Even with the UK economy picking up leading to improvements in the labor market, the central bank has repeatedly said that rate increases will only happen sooner with additional data and if done gradually through minimal increments.
Credit Suisse economist Neville Hill says that when taken together with figures showing further improvement in the region’s unemployment, inflation nearing the target could spur some members of the BoE’s monetary policy council to vote in favor of an earlier hike during the bank’s meeting in August. Minutes of their latest meeting from earlier this month, which economists have been waiting for to look for signs of progress in its scheduling, will be released next week.
The material has been provided by InstaForex Company – www.instaforex.com
Inflation in the United Kingdom underwent an unexpected jump last month boosting speculation that rate hikes will happen earlier than what was previously scheduled.
According to market data, the annual rise of consumer prices up until June went up to the year’s highest level of 1.9%. While an increase in prices was present across a majority of goods and services in the UK, among the biggest contributors to the increased rate were prices of food and clothing. This comes as a surprise especially since supermarkets had initially engaged in a competition on who can offer the largest discount and the pound sterling strengthened reducing import costs.
The Bank of England (BoE) currently holds a target inflation rate of 2% which has been one of the primary reasons why it has persisted on maintaining interest rates at their current record low. Even with the UK economy picking up leading to improvements in the labor market, the central bank has repeatedly said that rate increases will only happen sooner with additional data and if done gradually through minimal increments.
Credit Suisse economist Neville Hill says that when taken together with figures showing further improvement in the region’s unemployment, inflation nearing the target could spur some members of the BoE’s monetary policy council to vote in favor of an earlier hike during the bank’s meeting in August. Minutes of their latest meeting from earlier this month, which economists have been waiting for to look for signs of progress in its scheduling, will be released next week.
The material has been provided by InstaForex Company – www.instaforex.com
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