Due to rising fuel and clothing prices, the UK inflation rate jumped to 2.1%, higher than the Bank of England’s target-Business Facts | Business

Good morning, and welcome to our rolling report on the world economy, financial markets, the Eurozone and business.

inflation As the economy recovers from the Covid-19 lockdown, the cost of fuel, clothing and dining out has soared, and house prices across the UK have surpassed the Bank of England’s target for the first time in nearly two years.

UK Consumer Price Index The data just released showed that it jumped to 2.1% in May compared with the same period last year, which was significantly higher than 1.5% in April.

This is the highest CPI reading since July 2019, higher than the 1.8% expected by economists and slightly higher than the Bank of England’s 2% inflation target.

The National Bureau of Statistics said transport Last year’s contribution to the increase in inflation was the biggest, and the increase in gasoline prices hit motorists at gas stations.

Price increased clothing, Leisure Productssecond Such as games and recording media, and Meals and drinksdepleted This also pushes up the cost of living compared to when the United Kingdom was in lockdown in May 2020. In May alone, the CPI rose by 0.6%.

But food and non-alcoholic beverages have a downward impact on inflation, as prices fell this year but rose a year ago, especially bread and cereals.

The National Bureau of Statistics said that in the 12 months ending in May, the core inflation rate, excluding the prices of food, energy and other volatile items, rose to 2.0%.

The data may exacerbate concerns that inflation will exceed the Bank of England’s 2% target for longer than expected.

Last week, Andy Haldane, chief economist at the Bank of England, stated that the UK is at a dangerous time. “There is considerable pressure on prices” And the risk of starting wages and prices”A jumping game”, Leading to a wage price spiral (Although not on the scale of the 1970s and 1980s).

More attention…

Came today too

Inflation will be an important agenda for Washington today, the United States U.S. Federal Reserve Policymakers are holding a monetary policy meeting. In light of recent economic growth and price recovery, the Federal Open Market Committee may send a signal to Wall Street (and other regions) that it is considering slowing down its bond purchase stimulus plan.

The FOMC will also release new economic forecasts, and investors will carefully study its updated “dot chart”, which shows changes in members’ expected interest rates over time. This may advance the possible date of the first rate hike.

U.S. consumer price inflation hit a 13-year high of 5% last month, But Fed Chairman Jerome Powell may insist on his dovish view that inflationary pressures will be temporary rather than stubborn-especially in the US in April and May employment growth was lower than expected, and last month In the case of declining retail sales.

Kyle Roda of IG Explanation:

In the short term, everything depends on the Fed meeting and the central bank’s hints on its future policies. The policy setting itself will not change, that’s for sure. However, as the Federal Reserve announced its economic forecasts and famous dot plots, there was a keen interest in whether members of the Federal Reserve’s board of directors might begin to see the need to raise interest rates and tighten policies.

The language in the statement may remain moderate, and hopes to alleviate concerns about reductions and interest rate hikes. However, there are signs that some people within the Fed think it is at least time to start “considering” tightening policies, and these declines may have an impact on market pricing.

Today we also obtained new housing data from the UK and the US. Global stock markets are still near historical highs, while The FTSE 100 Index closed at a nearly 16-month high last night.
Yesterday’s economic data was mixed – and UK unemployment rate drops This effect was offset by a 1.3% drop in US retail sales, lower confidence in US homebuilders, and a 6.6% annual increase in US producer prices. This eliminated some of the heat on Wall Street yesterday.

Agenda

• 7 am BST: UK May Inflation Report
• 7 am BST: UK Producer Price Inflation in May
• 8 am British Summer Time: China’s fixed investment, industrial production and retail sales in May
• BST 9.30 AM: UK House Price Index in April
• 12 noon British summer time: weekly mortgage applications in the United States
• 1.30pm BST: U.S. Building Permits and Housing Starts in May
• BST 3.30pm: EIA weekly oil inventory data
• 7pm BST: The Federal Reserve releases interest rate decisions and economic forecasts
• 7.30pm BST: Federal Reserve Press Conference