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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/jul/18/uk-inflation-cost-of-living-squeeze-pound-ftse-business-live
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| Version 1 | Version 2 |
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| UK inflation rate falls to 2.6% – business live | |
| (35 minutes later) | |
| 9.36am BST | |
| 09:36 | |
| The drop in inflation last month is mainly due to falling petrol prices, says the Office for National Statistics. | |
| 9.31am BST | |
| 09:31 | |
| UK INFLATION RELEASED | |
| Breaking! Britain’s inflation rate has fallen to 2.6% in June, down from 2.9% in May. | |
| That’s a smaller reading than expected; City has expected inflation to remain at last month’s four-year high. | |
| But it still means that living standards are being squeezed, as wages are only rising by 2% (according to the latest data, released last week). | |
| More to follow! | |
| Updated | |
| at 9.34am BST | |
| 9.28am BST | |
| 09:28 | |
| Tension is rising in the City, as traders get ready for the inflation figures to hit the wires.... | |
| Stand by your beds, UK inflation data up in 10 minutes! June CPI expected +0.2% m/m, +2.9% y/y. How exciting! ;) | |
| Stand by your desks! UK inflation data is on its way #CPI #RPI | |
| 9.25am BST | |
| 09:25 | |
| Former Bank policymakers clash (again) over inflation | |
| Angela Monaghan | |
| If inflation remains at a four-year high of 2.9% in June, or even goes higher, it will intensify the debate about when UK interest rates should rise (for the first time since 2007). | |
| Danny Blanchflower and Andrew Sentance, both former members of the Bank’s rate setting monetary policy, (and long-term opponents in economic theory) have been outlining their differing views on the BBC’s Radio 4 Today programme. | |
| Sentance says the Bank should follow the US Fed’s example and raise rates immediately: | |
| “I think inflation is going to go up eventually this year to over 3% and that’s squeezing the living standards of workers and people throughout the economy and I think the worry that I would have is that the bank of England hasn’t responded at all to this situation. It can do something about it. If it gradually raised interest rates that would help support the value of the pound so we would get less imported inflation and that might take some of the pressure off consumers.” | |
| Blanflower on the other hand thinks a rate rise now would be a “self-inflicted wound”. | |
| “Here Andrew goes again he’s been saying the same thing for the last 10 years. This is precisely the wrong thing to do. | |
| “Why would you want to have a self-inflicted wound at a time when Brexit negotiations is taking place, we’ve no idea how it’s going to be resolved and that’s obviously a big problem, firms are sitting thinking what the heck is going to happen. So if you start to raise rates now this is precisely the wrong time to do it. Waiting and watching is sensible. My suspicion is this inflation is temporary and it will start to drop away.” | |
| Updated | |
| at 9.27am BST | |
| 9.14am BST | |
| 09:14 | |
| Zing! The pound just hit a fresh 10-month high against the US dollar. | |
| Sterling nudged $1.3126 for the first time since September 2016, as Trump’s healthcare setbacks continue to weaken the dollar. | |
| 9.03am BST | |
| 09:03 | |
| City broker Panmure Gordon hopes that the worst of Britain’s inflation surge may be coming to an end. | |
| They told clients this morning that the jump in import prices, following the Brexit vote, seems to have peaked a few months ago. That should mean that inflationary pressures ease a little. | |
| Here’s a snapshot of their note: | |
| 8.49am BST | 8.49am BST |
| 08:49 | 08:49 |
| Economist Rupert Seggins is tweeting some useful charts on inflation: | Economist Rupert Seggins is tweeting some useful charts on inflation: |
| (1/4) UK inflation today. Consensus is for a 2.9%y/y change in consumer prices in June, same as May. Still means a pay squeeze. pic.twitter.com/uyymUr2LVf | (1/4) UK inflation today. Consensus is for a 2.9%y/y change in consumer prices in June, same as May. Still means a pay squeeze. pic.twitter.com/uyymUr2LVf |
| (2/4) Oil price growth has slowed down sharply, meaning less pressure on UK transport price inflation in June. pic.twitter.com/gpJG3fyFkf | (2/4) Oil price growth has slowed down sharply, meaning less pressure on UK transport price inflation in June. pic.twitter.com/gpJG3fyFkf |
| (3/4) World food price growth is also slowing. Should limit UK price rises in June with further cooling in the coming months. pic.twitter.com/RFu2UUGexn | (3/4) World food price growth is also slowing. Should limit UK price rises in June with further cooling in the coming months. pic.twitter.com/RFu2UUGexn |
| (4/4) This is the big one to watch. Core UK price inflation. Pass through from sterling has a way to go yet. pic.twitter.com/ACIKnkXH2E | (4/4) This is the big one to watch. Core UK price inflation. Pass through from sterling has a way to go yet. pic.twitter.com/ACIKnkXH2E |
| 8.49am BST | 8.49am BST |
| 08:49 | 08:49 |
| Some City economists have predicted that UK inflation could rise to 3% this morning. | Some City economists have predicted that UK inflation could rise to 3% this morning. |
| If so, that could send the pound soaring as it would intensify the pressure on the Bank of England to consider raising interest rates. | If so, that could send the pound soaring as it would intensify the pressure on the Bank of England to consider raising interest rates. |
| Hussein Sayed, chief market strategist at FXTM, says: | Hussein Sayed, chief market strategist at FXTM, says: |
| If headline inflation hits 3% or above, this will indicate a high chance of hiking rates when the BoE meets in August. However, if the numbers pull back, this would ease pressure on the central bank and traders will turn their attention to the Brexit talks. | If headline inflation hits 3% or above, this will indicate a high chance of hiking rates when the BoE meets in August. However, if the numbers pull back, this would ease pressure on the central bank and traders will turn their attention to the Brexit talks. |
| 8.29am BST | 8.29am BST |
| 08:29 | 08:29 |
| Sterling hits $1.31 as US dollar slides | Sterling hits $1.31 as US dollar slides |
| The pound has risen over $1.31 in early trading, up almost half a cent. | The pound has risen over $1.31 in early trading, up almost half a cent. |
| That’s close to last week’s 10-month high, ahead of today’s inflation report. | That’s close to last week’s 10-month high, ahead of today’s inflation report. |
| Most currencies are gaining ground against the US dollar this morning, after president Trump’s attempts to shake up America’s healthcare system hit another roadblock. | Most currencies are gaining ground against the US dollar this morning, after president Trump’s attempts to shake up America’s healthcare system hit another roadblock. |
| Overnight, two senators declared they wouldn’t support Trump’s push to repeal Obamacare. So, with veteran lawmaker John McCain recovering from surgery, the Republicans simply don’t have the votes....especially as some senators fear that millions of Americans, especially with pre-existing conditions, would suffer if the Affordable Care Act was repealed. | Overnight, two senators declared they wouldn’t support Trump’s push to repeal Obamacare. So, with veteran lawmaker John McCain recovering from surgery, the Republicans simply don’t have the votes....especially as some senators fear that millions of Americans, especially with pre-existing conditions, would suffer if the Affordable Care Act was repealed. |
| This has hurt the dollar, as it undermines hopes that Trump could deliver tax reforms or a big new infrastructure spending programme. | This has hurt the dollar, as it undermines hopes that Trump could deliver tax reforms or a big new infrastructure spending programme. |
| Dollar slumps to a 10-month low after setback on U.S. health-care bill https://t.co/uEGulxj8NA pic.twitter.com/XQvdfDUlPh | Dollar slumps to a 10-month low after setback on U.S. health-care bill https://t.co/uEGulxj8NA pic.twitter.com/XQvdfDUlPh |
| This has sent the euro rallying to its highest level against the US dollar since May 2016. | This has sent the euro rallying to its highest level against the US dollar since May 2016. |
| Euro above $1.15, highest since May last year. Up 10% this year. Big test of ECB/periphery tolerance now. pic.twitter.com/QhLmpZboGq | Euro above $1.15, highest since May last year. Up 10% this year. Big test of ECB/periphery tolerance now. pic.twitter.com/QhLmpZboGq |
| Updated | Updated |
| at 8.30am BST | at 8.30am BST |
| 8.02am BST | 8.02am BST |
| 08:02 | 08:02 |
| The agenda: UK inflation | The agenda: UK inflation |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| The cost of living squeeze is one of the hottest topics in Britain today, thanks to the decline in the pound last year and the government’s public sector pay squeeze. | The cost of living squeeze is one of the hottest topics in Britain today, thanks to the decline in the pound last year and the government’s public sector pay squeeze. |
| So the main event today is the latest inflation figures, due at 9.30am today. They’re all-but-certain to show that prices are rising faster than wages. | So the main event today is the latest inflation figures, due at 9.30am today. They’re all-but-certain to show that prices are rising faster than wages. |
| Economists predict that the Consumer Prices Index will hit 2.9% for June, matching May’s figure. That would mean that real wages are continuing to shrink, as basic pay is currently only growing by 2% per year. | Economists predict that the Consumer Prices Index will hit 2.9% for June, matching May’s figure. That would mean that real wages are continuing to shrink, as basic pay is currently only growing by 2% per year. |
| Prices are being driven up by the slump in the pound last June, which makes imports much dearer. So today’s figures will also show the impact of Britain’s vote to leave the EU. | Prices are being driven up by the slump in the pound last June, which makes imports much dearer. So today’s figures will also show the impact of Britain’s vote to leave the EU. |
| Samuel Tombs of Pantheon Economics predicts that food prices drove inflation up last month: | Samuel Tombs of Pantheon Economics predicts that food prices drove inflation up last month: |
| UK CPI inflation probably held steady at 2.9% in June. Yes, fuel prices fell back, but food inflation likely jumped in response to lower £: pic.twitter.com/oyWXLaSu4R | UK CPI inflation probably held steady at 2.9% in June. Yes, fuel prices fell back, but food inflation likely jumped in response to lower £: pic.twitter.com/oyWXLaSu4R |
| Inflation has surged over the Bank of England’s official target of 2% in recent months, as our economics editor Larry Elliott explains: | Inflation has surged over the Bank of England’s official target of 2% in recent months, as our economics editor Larry Elliott explains: |
| Inflation was running at 0.6% when the UK voted to leave the EU in June 2016 but it has risen subsequently as a result of higher oil prices and dearer imports caused by the 12% decline in the value of the pound over the past 12 months. | Inflation was running at 0.6% when the UK voted to leave the EU in June 2016 but it has risen subsequently as a result of higher oil prices and dearer imports caused by the 12% decline in the value of the pound over the past 12 months. |
| That has taken the annual inflation rate to its highest level in four years and close to the level where Mark Carney, the governor of the Bank of England, would be forced to write a letter to the chancellor, Philip Hammond, explaining why Threadneedle Street had failed to keep the annual increase in the cost of living to within one percentage point of the government’s 2% target. | That has taken the annual inflation rate to its highest level in four years and close to the level where Mark Carney, the governor of the Bank of England, would be forced to write a letter to the chancellor, Philip Hammond, explaining why Threadneedle Street had failed to keep the annual increase in the cost of living to within one percentage point of the government’s 2% target. |
| Here’s Larry’s preview: | Here’s Larry’s preview: |
| UK inflation figures will shine light on impact of pound's Brexit slidehttps://t.co/xqEgBEVDwt | UK inflation figures will shine light on impact of pound's Brexit slidehttps://t.co/xqEgBEVDwt |
| The ONS will also publish its latest house price index, which may show that prices rose at a slower pace in May. | The ONS will also publish its latest house price index, which may show that prices rose at a slower pace in May. |
| And over at Winchester cathedral, the Bank of England is preparing to unveil the final design of its new polymer £10 note. We already know it will feature Jane Austen, 200 years after the author’s death. | And over at Winchester cathedral, the Bank of England is preparing to unveil the final design of its new polymer £10 note. We already know it will feature Jane Austen, 200 years after the author’s death. |
| The agenda: | The agenda: |
| 9am BST: ECB survey of bank lending in the eurozone | 9am BST: ECB survey of bank lending in the eurozone |
| 9.30am BST: UK inflation report for June | 9.30am BST: UK inflation report for June |
| 9.30am BST: UK house price survey for May | 9.30am BST: UK house price survey for May |
| 10am BST: Germany’s ZEW Economic Sentiment Index | 10am BST: Germany’s ZEW Economic Sentiment Index |
| Afternoon: Bank of England unveils new Jane Austen £10 note | Afternoon: Bank of England unveils new Jane Austen £10 note |
| Updated | Updated |
| at 8.05am BST | at 8.05am BST |