UK inflation for May rose slightly faster than forecast to 2.1% year-on-year and is the highest level of inflation seen in nearly two years.
UK inflation for May rose slightly faster than forecast to 2.1% year-on-year and is the highest level of inflation seen in nearly two years. This transient inflation surge explained away by many central bank chiefs is at risk of becoming something more permanent or at least that continues to be the overhanging concern for markets. The current trajectory of inflation should be no real surprise as the world economy begins the slow steps out of virus related lockdowns (albeit delayed for another month in the UK) and year-on-year comparisons will inevitably look at the headline level as somewhat surprising with the base effects of last year now firmly priced in. Our expectation is that these inflation overshoots will be a temporary phenomenon we will see for a few more quarters yet before falling back nearer to the central bank target level.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.