Inflation bites in the UK as households come under price pressure
Consumer spending figures due out today are expected to reflect a continued upward trend in inflation.
July and August data showed consumer prices rose by 2.6% and 2.9% respectively—the highest since 2012. Inflationary pressures have been mounting since the EU referendum result in 2016 collapsed the value of the British pound, resulting in more expensive imports.
Indeed, today’s report could see inflation rise above 3%, well above the Bank of England’s 2% target. Last month, Governor Mark Carney said that an interest rate hike is on its way “in the coming months”. Rates currently sit at 0.25%; lobby groups want no change for now.
Unless wages rise in line with price rises, PM Theresa May’s minority government will likely face increasing public pressure to deal with the wage squeeze. To add insult to injury, an impending interest rate hike will increase mortgage repayments, directly affecting May’s base: middle-class voters.
Jeremy Corbyn is likely to exploit any public ill-will and tout his party’s wage-friendly policies, including a ten-pound living wage.
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