Home Business News Disruption in global food markets is starting to feed through into the numbers ‘and looks set to drive continued inflation’

Disruption in global food markets is starting to feed through into the numbers ‘and looks set to drive continued inflation’

by LLB Finance Reporter
22nd Jun 22 12:29 pm

Inflation (CPIH) in May rose to 7.9%, up from 7.8% in April, major contributors included household energy bills and transport costs, with prices for food and non-alcoholic accelerating fastest compared to April.

Inflation now at its highest rate since April 1991, the pound was broadly unchanged following the announcement having weakened slightly earlier in the morning.

Nicholas Hyett, Investment Analyst, Wealth Club said, “With the Bank of England expecting inflation to peak at around 11% in October, the direction of travel in today’s inflation numbers are no surprise.

“However, the rate of change has slowed as global energy prices start to stabilise and the domestic energy price cap kicks in.

“Disruption in global food markets is only beginning to feed through into the numbers though, and looks set to drive continued inflation in the months to come, not helped by continued weakness in the pound.

“Recent reports elsewhere suggest wages are struggling to keep up with rising prices. That’s bad news for consumers and means the costs of living squeeze is likely to get worse, making a sustained recession more likely.

“But, for those looking for a ray of light in these numbers, slower wage growth could mean the current inflationary surge proves sort lived – subsiding once the commodity and supply crunches caused by the pandemic and war in Ukraine fall out of the numbers.

“That certainly seems to be the Bank of England’s hope given last week’s more modest 0.25% rate.

“Nonetheless this morning’s numbers will do nothing to ease worries for policy makers, businesses, investors and, of course, cash strapped families, as inflation reaches its highest level in over 30 years.”

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