The United Kingdom’s inflation has remained stubbornly high at 8.7 percent in May – the same rate as the previous month – pressuring the Bank of England (BoE) to take action.
The BoE is expected to raise interest rates – a monetary measure used to control inflation – on Thursday for the 13th consecutive time.
The central bank is an independent body.
Meanwhile, the inflation rate in May stood at 4 percent in the United States. Japan saw inflation at 3.4 percent, while Germany registered inflation at 6.3 percent and France’s inflation stood at 6 percent.
Why is inflation so high?
Previous BoE forecasts had predicted that the UK’s inflation rates would ease by dropping to just above 5 percent in the final quarter of 2023 and falling below its 2 percent target in early 2025.
But big price rises across the economy, energy subsidies and Britain’s struggling post-pandemic jobs market have led to soaring inflation rates.
British inflation also accelerated sharply after Russia’s full-scale invasion of Ukraine in February 2022, which sent natural gas prices soaring across Europe.
The Office for National Statistics said core inflation – a measure that excludes volatile food, energy, alcohol and tobacco prices, and which the BoE views as a good guide to underlying price pressures – unexpectedly rose to 7.1 percent from 6.8 percent, its highest since March 1992.
Another measure of underlying pressures – services inflation, which is heavily influenced by fast-rising wages and Britain’s tight post-pandemic job market – also reached its highest since 1992 at 7.4 percent.
“The cost of airfares rose by more than a year ago and is at a higher level than usual for May,” Office for National Statistics chief economist Grant Fitzner said.
“Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high.”
But food and drink price inflation dropped slightly to 18.3 percent from April’s 19 percent.
Meanwhile, producer price inflation also slowed much more sharply than economists had expected, with prices charged by manufacturers rising by 2.9 percent in the 12 months to May, down from an increase of 5.2 percent in April.
What is the British government doing about it?
Tackling inflation has been British Prime Minister Rishi Sunak’s priority before the general election next year.
“I’m working day in and day out to give families the support they need, while working to halve inflation, reduce debt and grow the economy,” he said on Twitter, a day before May’s inflation figures were released.
I’m working day in and day out to give families the support they need, while working to halve inflation, reduce debt and grow the economy ???? pic.twitter.com/cqg4EmnEcN
Mortgage costs are likely to increase for millions of homeowners, with Chancellor of the Exchequer Jeremy Hunt ruling out financial support for mortgage holders.
“Today’s figures strengthen the case for the government to stick to its guns,” Hunt told reporters in the UK.
“If you look at what’s happening in other countries, you can see that rises in interest rates do bring down inflation over time, that will happen here,” he added.
Markets see a 40 percent chance that the BoE will raise interest rates by half a percentage point to 5 percent, rather than the quarter-point move previously expected, in an effort to control inflation.
Paul Dales, chief UK economist at Capital Economics, told the Reuters news agency that he now forecasts the BoE raising interest rates by half a percentage point on Thursday after the latest numbers.
“The problem is that the recent surge in core inflation and the re-acceleration in wage growth shows that domestic inflationary pressures are still strengthening,” Dales said.
“This suggests the Bank may have more work to do than the Fed or ECB [European Central Bank].”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
