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Earnings decline in relation to inflation

GBP Not Benefiting From Higher UK CPI Inflation in June

Posted Wednesday, July 20, 2022 by
Skerdian Meta • 2 min read

Inflation has been growing in the UK like in most western countries, hitting 9.1% in May, as the report last month showed. Today’s report was expected to show another increase in June to 9.3%, although inflation beat expectations again. But, the GBP is not benefiting from it, even though the Bank of England should pick up the rate hike pace.

The United Kingdom has announced pay rises for millions of workers including police, doctors, and teachers as part of a pay review for public-sector staff that comes amid soaring prices and growing industrial unrest, although the increase is smaller than inflation. With inflation set to top 11 percent later this year, the increases given to millions of public-sector workers are being closely watched as ministers warn of the danger of a wage-price spiral and unions demand bigger raises for their members.

Today, the UK inflation hit yet another new high, the highest in 40 years in June, as food and energy prices continued to surge, escalating the country’s historic cost-of-living crisis, despite the wage raise from the government. The CPI (consumer price index) inflation increased by 9.4% annually, slightly above the forecast of 9.3%, while in the previous reading CPI was 9.1%.

UK June CPI Inflation Report

UK CPI

  • June CPI YoY +9.4% vs +9.3% expected
  • May CPI YoY was  +9.1%
  • Core CPI Yoy +5.8%vs +5.8% expected
  • Prior core CPI YoY was +5.9%

UK consumer inflation rises further in June and this just reaffirms that the reading is on its way towards double-digits, as per the trajectory that the BOE had anticipated. On the month itself, inflation rose by 0.8% with the details revealing that housing and household services contributed the most to the increase in prices. Producer prices also moved higher with input prices rising by 1.8% on the month and output prices rising by 0.8% on the month. This will do little to dissuade the BOE from hiking by 50 bps in August.

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