UK not mirroring the direction of travel in other Western economies
19 April 2023
UK inflation for March remained at elevated levels and certainly not mirroring the direction of travel in other Western economies. At a 10.1% year-on-year change, CPI remains in double digit territory against broader market expectations of a drop to 9.8%. This will be an uncomfortable inflation print for the Bank of England (BoE) with Governor Andrew Bailey recently intimating that a pause to the hiking cycle would be warranted if inflation was seen to be subduing. Surging imported food costs was the key driver of the persistently higher-than-comfortable inflation costs. The dangers of additional wage price spirals feeding off and perpetuating a demand led inflation spiral are obvious. At these levels, another quarter point hike is warranted at next month’s BoE meeting and possibly further additional hikes further out. The BoE needs to take back control because at the moment, it is falling woefully short.
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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.