The climb to the inflationary peak is set to continue
UK inflation which – while coming in at a widely expected 9.1% for the month of May year-on-year – continues to tick higher. Expectations of not being near the peak seem fairly obvious, particularly due to the continuing energy price pressures exacting their toll as we move towards the second half of the year. The vicious circle of higher prices is more easily seen in producer price inflation, with output prices up 15.7% and input prices showing a vicious increase of 22.1% – so companies are passing on some but not all of these broader price increases. Inflation looks here to stay in the UK, with many investment bank economists pointing the finger to the self-immolating effect of Brexit and the more than evident rapid slowdown in the UK economy. Inflation with slowing growth does not a strong currency make, and sterling continues to remain the unloved major in foreign exchange circles.
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