TAIPEI, Taiwan, September 18, 2017 (Newswire.com) - Inflation in the United Kingdom surged to its highest in five years last year as the effects of the country’s landmark EU referendum continued to be felt on the global currency markets.
Inflation, as gauged by the CPI (Consumer Prices Index) rose to 2.9 percent in August, up from 2.5 percent posted in July. The plunge in the value of the Pound Sterling since the 'Leave' vote in June 2016 continued to make itself felt in the rising cost of the goods and materials the country imports.
Despite the news, Taipei, Taiwan-headquartered investment boutique, Burton Mills told clients that while inflation may continue to rise modestly in the immediate future, increases may be capped by a weakening U.S. dollar, the currency in which most of the U.K.’s imports are denominated.
The Office of National Statistics (ONS) said that the prices of most goods rose during the previous month thanks to growing import costs for retailers. Clothing and footwear made the largest impact while petrol nudged the cost of living higher.
The rising cost of living continues to be a thorn in the side of many households as the rate of inflation continues to comfortably outpace wage rises. The 2.9 percent print leaves the inflation rate far above the Bank of England’s official target of 2 percent but the central bank is widely expected to leave interest rates unchanged at the
The Bank of England, as widely expected, left interest rates unchanged on Thursday at the record low of 0.25 percent where it has been since an emergency cut following the June 23rd, 2016 Brexit vote. Two MPC voting members dissented and called for a hike to 0.5 percent citing concerns about the inflation rate.
Burton Mills says the British pound is likely to continue to strengthen against the U.S. dollar as hopes for further rate hikes from the U.S. Federal Reserve fade against a backdrop of potentially weakening job creation and a lack of confidence in President Donald Trump’s ability to push through pro-business tax reforms.
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Source: Burton Mills