U.K. inflation hits 9.1%: senior economist warns we’re yet to see the peak

on Jun 22, 2022
  • Consumer prices in the U.K hit a new forty-year high of 9.1% in May.
  • Senior economist Azad Zangana warns U.K. is yet to see peak inflation.
  • The blue-chip FTSE 100 index still closed in the green on Wednesday.

Consumer prices in the United Kingdom hit a new forty-year high of 9.1% in May, the Office for National Statistics reported on Wednesday.

Senior economist’s remarks on CNBC

According to the Bank of England, headline inflation could go as high as 11% by the end of this year. Agreeing to the forecast on CNBC’s “Street Signs Europe”, Schroders’ Azad Zangana said:

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

We haven’t seen the full pass through yet of the energy price inflation because of the energy price cap that exists within the U.K. Most forecasters are looking for inflation to stay quite elevated for most of next year as well.

The reading was in line with expectations and succeeded a 9.0% year-over-year increase recorded in the prior month.

Why is inflation a bigger problem for the U.K.?

The FTSE 100 index closed in the green on Wednesday even though the U.K. is facing the highest inflation in the Group of Seven (G7). Explaining why, the senior European economist said:

We’ve had difficulties following Brexit with regards to supply of labour within the economy. It seems that the rise in home energy and fuel prices has fed through into higher wages more quickly than in other parts of the advanced world.

Following a fifth consecutive increase in interest rates last week, the central bank of the United Kingdom now has its main rate pegged at 1.25% – a 13-year high.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, Capital.com
75.26% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.