British inflation hit a 40-year high in June. This has exacerbated the cost of living crisis and increased pressure on the Bank of England (BoE) to proactively raise its policy interest rate in August.
The UK’s Office for National Statistics (ONS) said today that the UK Consumer Price Index (CPI) rose 9.4 percent in June from a year earlier. This was the biggest increase since Feb. 1982 and up from 9.1 percent in May, helped by a 9.3 percent rise in automotive fuel prices for the month.
Now, the price of goods has risen significantly outpacing wages. The household sector tends to face more difficulties. Inflation is expected to hit 11 percent in October when energy prices are raised again.
BoE policy officials are concerned that Rising inflation could intensify. If wage increases and rising raw material costs pressure companies to continuously raise prices
BoE Governor Andrew Bailey signaled last night about the possibility of a 0.50% interest rate hike in August as the BoE ramps up its efforts to bring inflation back. To its 2% target, it will raise interest rates by 0.50% for the first time since the BoE gained independence from monetary policy in 1997.
