HomeBusinessThe UK is closing in on the inflation rate with double digits

The UK is closing in on the inflation rate with double digits

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The UK is closing in on the inflation rate with double digits
The UK is closing in on the inflation rate with double digits

UK inflation likely hit a new four-decade high above 9% in May. Underscoring the challenge for the Bank of England as it threatens faster interest rate hikes in response.

A week after rising U.S. consumer prices prompted the Federal Reserve’s accelerated 75 basis point rise. That amid spasms in global financial markets. The British data will offer investors another opportunity. The opportunity to wonder if policymakers’ reaction is adequate.

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While economists’ median prediction for inflation on Wednesday. They anticipate an increase to 9.1%, one estimate, from Natixis SA, suggests a 10% result. The BOE estimates that the peak by the end of this year will be “slightly above” 11%.

That forecast accompanied the decision last week by officials. That led Gov. Andrew Bailey to raise the rate for the fifth consecutive meeting, by a quarter-point and signaled. That a larger move could occur if necessary to control inflation.

The BOE also warned that the economy could be suffering a contraction in the second quarter. An analysis that this week’s reports could help validate. Economists’ forecasts show retail sales likely fell 0.7% in May. While surveys of purchasing managers reveal a further slowdown. The slowdown in both manufacturing and services respectively.

Investors will also look at policymakers’ reactions to such data, with at least seven such appearances planned this week. That includes two by chief economist Huw Pill. Worsening economic news will fuel political debate. Whether Prime Minister Boris Johnson’s government is doing enough to ease the cost-of-living crisis or not.

On Thursday, Brexit is debated as it is to blame. The sixth anniversary of Britain’s vote to leave the European Union will feature two special elections. Where the citizens of the northern and southwestern districts of England can share their views at the polls.

What does Bloomberg Economics say about the UK economy?

“Ominously, UK consumer confidence is now below the levels seen during the global financial crisis. Such as Covid-19 lockdowns, and recessions in the 1980s and 1990s.”

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