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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/17/uk-inflation-wage-squeeze-mark-carney-bank-of-england-live
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| UK inflation rate hits five-year high of 3% - business live | |
| (35 minutes later) | |
| 10.00am BST | |
| 10:00 | |
| The Federation of Small Businesses is aghast that its members face a 3.9% increase in business rates next year, thanks to today’s RPI inflation report (details here) | |
| Mike Cherry, the FSB’s national chairman, says UK firms have suffered enough, following the controversial revaluation process that send some bills spiralling higher. | |
| Today’s RPI figure follows six months of business rates misery for our small business community. | |
| Since April’s bruising revaluation we’ve had the staircase tax, introduction of an unworkable appeals platform and chronic delays to the Chancellor’s £435 million relief package. A near four per cent bill increase next April, on top of losing year one transitional caps, will be the last straw for many. | |
| 9.55am BST | |
| 09:55 | |
| The TUC, which represents millions of British workers, says the government needs to respond to the ongoing wage squeeze that is hurting UK households and ditch the cap on public sector pay. | |
| TUC General Secretary Frances O’Grady said: | |
| “The government needs to face up to Britain’s cost of living crisis. The squeeze on household budgets is getting tighter by the month. | |
| “The Chancellor must use November’s Budget to ease the pressure on hard-pressed families. | |
| “That means giving five million public sector workers the pay rise they have earned. | |
| “Prices are sky-rocketing. Offering hard-working public servants below-inflation increases would amount to yet another real-terms pay cut.” | |
| She also argues that the Bank of England should not raise interest rates from their current alltime low of 0.25% | |
| “Raising interest rates now would be a big mistake. The UK economy is simply not strong enough. | |
| “We need to get wages rising before we start think about hiking rates.” | |
| 9.52am BST | |
| 09:52 | |
| Real wage squeeze continues | |
| This is one of the most depressing charts in UK economics today -- showing how UK workers’ pay packets are shrinking in real terms. | |
| With UK inflation hitting a 5-year high of 3%, real wages continue to be squeezed. Nothing to suggest this is going to change any time soon. pic.twitter.com/gY9sL35gfV | |
| As you can see, its the second wage squeeze in a decade. | |
| 9.51am BST | |
| 09:51 | |
| The retail prices index, another measure of inflation, rose by 3.9% in September. | |
| That means that UK firms face a 3.9% rise in their business rates next year, under the current system. It could also drive up costs for motorists. | |
| RPI at 3.9% also suggests a fuel duty hike of nearly 3p per litre in April 2018 unless the Chancellor acts | |
| 9.42am BST | |
| 09:42 | |
| Food and housing costs drove inflation up | |
| Housing and household services costs were the biggest single factor driving the cost of living up, the ONS adds, partly due to utility bills. | |
| 9.37am BST | |
| 09:37 | |
| This chart shows how UK inflation has risen sharply, to its highest level since April 2012 | |
| 9.30am BST | |
| 09:30 | |
| UK INFLATION HITS 3.0% | |
| Breaking! Britain’s inflation rate has hit a new five and a half-year high. | |
| The consumer prices index jumped by 3.0% in September, up from August’s 2.9%. That’s the highest reading since early 2012. | |
| This means that British workers are still suffering a pay squeeze, as average wages only rose by 2.1% per year in the three months to July. | |
| But I think it’s better news for pensioners, who can look forward to a 3% increase in the basic state pension next April. Under the triple-lock system, pensions rise in line with earnings growth, September’s CPI reading, or by 2.5%, whichever number is biggest. | |
| More to follow! | |
| 9.26am BST | 9.26am BST |
| 09:26 | 09:26 |
| A reminder of why today’s inflation reading is particularly important: | A reminder of why today’s inflation reading is particularly important: |
| Sept inflation data (out in 8mins) is the last month we'll get before the BOE interest rate decision on Nov 2. Unemployment tomorrow. | Sept inflation data (out in 8mins) is the last month we'll get before the BOE interest rate decision on Nov 2. Unemployment tomorrow. |
| 9.12am BST | 9.12am BST |
| 09:12 | 09:12 |
| Analysts at HSBC reckon the UK’s inflation rate jumped to 3.1% last month: | Analysts at HSBC reckon the UK’s inflation rate jumped to 3.1% last month: |
| HSBC on UK CPI: We look for 3.1% YY, supported by electricity & petrol prices, Ryanair cancellations and FX passthrough effects | HSBC on UK CPI: We look for 3.1% YY, supported by electricity & petrol prices, Ryanair cancellations and FX passthrough effects |
| 9.07am BST | 9.07am BST |
| 09:07 | 09:07 |
| Yikes! Shares in entertainment group Merlin have slumped by 20% in early trading. | Yikes! Shares in entertainment group Merlin have slumped by 20% in early trading. |
| Merlin has shocked the City by warning it suffered “difficult trading conditions” over the summer. | Merlin has shocked the City by warning it suffered “difficult trading conditions” over the summer. |
| The company, which runs Alton Towers, Madame Tussauds and the London Eye, said terrorism was partly to blame: | The company, which runs Alton Towers, Madame Tussauds and the London Eye, said terrorism was partly to blame: |
| The spate of terror attacks witnessed in the UK marked an inflection point in Midway London and UK theme park trading. | The spate of terror attacks witnessed in the UK marked an inflection point in Midway London and UK theme park trading. |
| Poor weather in Northern Europe and extreme weather in Italy and Florida also impacted peak season trading. | Poor weather in Northern Europe and extreme weather in Italy and Florida also impacted peak season trading. |
| Shares in Madame Tussauds owner Merlin Entertainments down 18% after warning that terror attacks hit attractions ... pic.twitter.com/kjaaN1dE1U | Shares in Madame Tussauds owner Merlin Entertainments down 18% after warning that terror attacks hit attractions ... pic.twitter.com/kjaaN1dE1U |
| 9.03am BST | 9.03am BST |
| 09:03 | 09:03 |
| Economist Rupert Seggins has tweeted some handy graphs on UK inflation, ahead of this morning’s data in 30 minutes time. | Economist Rupert Seggins has tweeted some handy graphs on UK inflation, ahead of this morning’s data in 30 minutes time. |
| 1. UK inflation figures for September out today - consensus is for 3%y/y rise in average prices (CPI). pic.twitter.com/Rp5np9GHoO | 1. UK inflation figures for September out today - consensus is for 3%y/y rise in average prices (CPI). pic.twitter.com/Rp5np9GHoO |
| This one shows how inflation typically tracks moves in the value of the pound (but roughly two years later) | This one shows how inflation typically tracks moves in the value of the pound (but roughly two years later) |
| 2.Sterling's still not done with core prices. Means a higher starting point for any further food/energy price rises to hit overall inflation pic.twitter.com/0meIxSaOXp | 2.Sterling's still not done with core prices. Means a higher starting point for any further food/energy price rises to hit overall inflation pic.twitter.com/0meIxSaOXp |
| This chart shows how the oil price influences the cost of living: | This chart shows how the oil price influences the cost of living: |
| 5. Changes in the oil price suggest that UK transport price inflation likely ticked up a bit in September. pic.twitter.com/kvNLH7YE4Z | 5. Changes in the oil price suggest that UK transport price inflation likely ticked up a bit in September. pic.twitter.com/kvNLH7YE4Z |
| 8.59am BST | 8.59am BST |
| 08:59 | 08:59 |
| Pound rises ahead of UK inflation figures | Pound rises ahead of UK inflation figures |
| Sterling is inching higher this morning, as City traders anticipate UK inflation hitting its highest levels since 2012. | Sterling is inching higher this morning, as City traders anticipate UK inflation hitting its highest levels since 2012. |
| The pound has gained almost half a eurocent against the euro, to €1.2175. It’s also up a more modest 0.1% against the US dollar, at $1.3263. | The pound has gained almost half a eurocent against the euro, to €1.2175. It’s also up a more modest 0.1% against the US dollar, at $1.3263. |
| Connor Campbell of SpreadEx explains: | Connor Campbell of SpreadEx explains: |
| Despite last night’s meeting between Theresa May and Jean Claude Juncker (and David Davis and Michel Barnier) producing nothing more than vague promise to ‘accelerate’ negotiations, the pound is on the rise this Tuesday. | Despite last night’s meeting between Theresa May and Jean Claude Juncker (and David Davis and Michel Barnier) producing nothing more than vague promise to ‘accelerate’ negotiations, the pound is on the rise this Tuesday. |
| That’s because investors are eagerly awaiting September’s inflation reading, which is set to see the consumer price index finally hit a 5 year high of 3.0%. Such a reading would put even more pressure on the Bank of England to raise rates, though that hawkish urge may be tempered by the continued fall in real wages (set to be confirmed tomorrow) and a sharp month-on-month drop in retail sales (coming on Thursday). | That’s because investors are eagerly awaiting September’s inflation reading, which is set to see the consumer price index finally hit a 5 year high of 3.0%. Such a reading would put even more pressure on the Bank of England to raise rates, though that hawkish urge may be tempered by the continued fall in real wages (set to be confirmed tomorrow) and a sharp month-on-month drop in retail sales (coming on Thursday). |
| 8.44am BST | 8.44am BST |
| 08:44 | 08:44 |
| Two years ago, CPI inflation was actually negative, at -0.1%. | Two years ago, CPI inflation was actually negative, at -0.1%. |
| That was partly to falling oil prices, which delivered cheaper petrol, and price wars between UK supermarkets. | That was partly to falling oil prices, which delivered cheaper petrol, and price wars between UK supermarkets. |
| But, as this chart shows, the inflation rate inched higher in late 2015 and early 2016 - and then accelerated sharply once the pound slumped after the Brexit vote. | But, as this chart shows, the inflation rate inched higher in late 2015 and early 2016 - and then accelerated sharply once the pound slumped after the Brexit vote. |
| 8.39am BST | 8.39am BST |
| 08:39 | 08:39 |
| Higher petrol prices and utility bills probably drove UK inflation up in September. | Higher petrol prices and utility bills probably drove UK inflation up in September. |
| Airline ticket prices could also push the consumer prices index up to 3%. That’s partly Ryanair’s fault; customers scrambled to buy new flights after it cancelled thousands of trips last month. | Airline ticket prices could also push the consumer prices index up to 3%. That’s partly Ryanair’s fault; customers scrambled to buy new flights after it cancelled thousands of trips last month. |
| Food, clothing and footwear are all ‘wild cards’ that could push inflation over 3%, says Marc Ostwald of ADM Investor Services. | Food, clothing and footwear are all ‘wild cards’ that could push inflation over 3%, says Marc Ostwald of ADM Investor Services. |
| 8.07am BST | 8.07am BST |
| 08:07 | 08:07 |
| The agenda: UK inflation figures | The agenda: UK inflation figures |
| 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. |
| Britain’s inflation rate could hit a new five-year high this morning, hitting people in the pocket and putting more pressure on the Bank of England to raise interest rates in November. | Britain’s inflation rate could hit a new five-year high this morning, hitting people in the pocket and putting more pressure on the Bank of England to raise interest rates in November. |
| City economists predict that inflation, based on the Consumer Price Index, jumped to 3.0% in September. That would be an increase on August’s 2.9%, and the highest level since spring 2012. | City economists predict that inflation, based on the Consumer Price Index, jumped to 3.0% in September. That would be an increase on August’s 2.9%, and the highest level since spring 2012. |
| If so, this would be the latest proof that the fall in the pound since last year’s Brexit vote is pushing up prices and hurting households and businesses. | If so, this would be the latest proof that the fall in the pound since last year’s Brexit vote is pushing up prices and hurting households and businesses. |
| It would also mean that prices are rising faster than earnings. The average pay packet only grew by 2.1% over the last year, meaning that real wages are falling. | It would also mean that prices are rising faster than earnings. The average pay packet only grew by 2.1% over the last year, meaning that real wages are falling. |
| Finn McLaughlin of Capital Economics says: | Finn McLaughlin of Capital Economics says: |
| We expect that CPI inflation (09.30 BST) rose from 2.9% in August to 3% in September, intensifying the real wage squeeze. That said, we suspect inflation is now not far from its eventual peak. | We expect that CPI inflation (09.30 BST) rose from 2.9% in August to 3% in September, intensifying the real wage squeeze. That said, we suspect inflation is now not far from its eventual peak. |
| We think that it will rise to about 3.2% before year-end. | We think that it will rise to about 3.2% before year-end. |
| UK Inflation set to rise above 3% this year and fall back to the @bankofengland 2% target by end of 2018 #EYITEM https://t.co/tPEpZluLOm pic.twitter.com/RqxGmj5SMX | UK Inflation set to rise above 3% this year and fall back to the @bankofengland 2% target by end of 2018 #EYITEM https://t.co/tPEpZluLOm pic.twitter.com/RqxGmj5SMX |
| UK CPI inflation likely to be 3pc or above in today's release for the first time since Spring 2012. Another good reason for Nov rate rise. | UK CPI inflation likely to be 3pc or above in today's release for the first time since Spring 2012. Another good reason for Nov rate rise. |
| Today’s inflation figures are particularly important as they’ll be used to set next year’s pensions rises (under the UK’s ‘triple lock’, pensions rise in line with wages, prices, or 2.5% - whichever is higher). | Today’s inflation figures are particularly important as they’ll be used to set next year’s pensions rises (under the UK’s ‘triple lock’, pensions rise in line with wages, prices, or 2.5% - whichever is higher). |
| The retail prices index, another measure of inflation, will be used to set next year’s business rates. It is expected to rise to 4% today, which would mean a 4% rise in business rates for UK firms. | The retail prices index, another measure of inflation, will be used to set next year’s business rates. It is expected to rise to 4% today, which would mean a 4% rise in business rates for UK firms. |
| If CPI rises by 3.1% or more, then the Bank of England will have to write to the government explaining why it’s not keeping inflation close to its 2% target. | If CPI rises by 3.1% or more, then the Bank of England will have to write to the government explaining why it’s not keeping inflation close to its 2% target. |
| With excellent timing, BoE governor Mark Carney and colleagues are testifying to MPs on the Treasury this morning, so we’ll see what they say about inflation, Brexit, and the state of the economy. | With excellent timing, BoE governor Mark Carney and colleagues are testifying to MPs on the Treasury this morning, so we’ll see what they say about inflation, Brexit, and the state of the economy. |
| Also coming up today: | Also coming up today: |
| The row between aircraft makers Boeing and Bombardier has taken a dramatic turn overnight; Airbus, the European consortium, is taking a controlling stake in Bombardier’s C Series business. | The row between aircraft makers Boeing and Bombardier has taken a dramatic turn overnight; Airbus, the European consortium, is taking a controlling stake in Bombardier’s C Series business. |
| That division, which employs thousands in Northern Ireland, was hit with US tariffs totalling 300% last month following a complaint from Boeing. | That division, which employs thousands in Northern Ireland, was hit with US tariffs totalling 300% last month following a complaint from Boeing. |
| Could this deal protect jobs? We’ll bring you more details as they come in | Could this deal protect jobs? We’ll bring you more details as they come in |
| Theme park operator Merlin Entertainment, online fashion retailer ASOS and model toy maker Hornby are all reporting results this morning too. | Theme park operator Merlin Entertainment, online fashion retailer ASOS and model toy maker Hornby are all reporting results this morning too. |
| Here’s the agenda | Here’s the agenda |
| 9.15am BST: Treasury committee question Bank of England deputy governor Sir Dave Ramsden, and new MPC member Silvana Tenreyro | 9.15am BST: Treasury committee question Bank of England deputy governor Sir Dave Ramsden, and new MPC member Silvana Tenreyro |
| 9.30am BST: UK inflation figures for September | 9.30am BST: UK inflation figures for September |
| 9.30am BST: UK house price figures for August | 9.30am BST: UK house price figures for August |
| 10am BST: Eurozone inflation figures for September | 10am BST: Eurozone inflation figures for September |
| 11.15am BST: Mark Carney testifies to the Treasury Committee | 11.15am BST: Mark Carney testifies to the Treasury Committee |
| Updated | Updated |
| at 8.24am BST | at 8.24am BST |