UK Inflation Jumps to 3.6% in June – What’s Driving the Upswing?
Last month’s consumer price index measured a sharp climb to 3.6 %, up from 3.4 % in May and a staggering step up from the 2.0 % recorded a year earlier. This unexpected bump throws a wrench into the already uncertain economic mix, adding a wobble to household spending and dampening the appetite for business investment.
Bank of England’s Likely Next Move
- Given the recent uptick, the Bank may trim rates again—probably next month, especially if tomorrow’s jobs snapshot looks weak.
- The latest figures sit just above the Bank’s forecast, which still chalks up the CPI ball pegs to 2 % by year‑end and beyond.
- That 2 % target is the sweet spot the Bank focuses on—the horizon that really matters for monetary policy.
Consumer and Business Sentiment: Still Calm, but Not Without Bite
Surveys show that expectations for inflation remain steady. Wage growth—once a hot topic—is now cooling in the underlying data, and the pace of broad money growth is easing after an already sluggish start.
Why the Gap in Inflation is Growing Wider
Since last October’s Budget, inflation in Britain has pulled further away from the euro area’s track. The primary culprit? The relentless crrunch of payroll costs. Seniority increments from National Insurance changes and the soaring national minimum wage are feeding price hikes across the board.
These policy moves—intended to power “working people”—are now repselling them back into the pockets of investors and the Bank of England, making every rate decision a bit trickier.
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