Britain’s pace of inflation picked up more than expected in July, pushing inflation to double digits for the first time in 40 years. The pressure on consumers is mounting, forcing governments and the Bank of England to act.
The Consumer Price Index (CPI) in July announced by the Office for Statistics (ONS) rose 10.1% from the same month last year. Economists had expected a 9.8% rise. The growth accelerated further from the 9.4% rise in June.
Bleak Winter
UK gas prices have doubled since the BOE’s May inflation forecasts
Source: ICE Futures Europe Commodities
Inflation is expected to exceed 13% by the end of the year if regulators allow energy price hikes again, according to the Bank of England. This was the highest level since September 1980, and the Thatcher administration at the time struggled to deal with the vicious circle of rising wages and prices.
After the release of the latest inflation data, the money market priced in the expectation that the Bank of England will raise the policy rate by a total of 2 percentage points by May next year. The Bank of England will raise interest rates by half a percentage point this month.traders are now1.75％We assume that the policy interest rate will rise to 3.75%.
Original title:UK Inflation Hits Double Digits for the First Time in 40 Years、Traders Bet on Two Percentage Points More of BOE Rate Hikes(excerpt)
(Updates with short-term money market interest rate outlook in final paragraph)