5/31/2023 0 Comments Mpc download![]() Market expectations, as implied by the most recent Overnight Index Swaps (OIS) curve, sees the Bank Rate peaking at 4.16 per cent in summer, notably lower than the 4.50 per cent expected at the time of last month’s tracker, following the recent spell of financial turbulence.For instance, the North of England experienced a trimmed-mean inflation rate of 10.31 per cent in February, while Northern Ireland experienced 8.67 per cent. It is notable, however, that regional trimmed-mean inflation dispersion has risen for the first time since September 2022. NIESR’s measure of underlying inflation rose in each of the 12 UK regions.These figures suggest that the increase in headline inflation is not a one-off movement, but rather reflects rising inflationary pressures. At the same time, the ONS’s measure of core inflation – CPI excluding food, energy, alcohol and tobacco – rose to 6.2 per cent in February from 5.8 per cent in January. ![]() NIESR’s measure of underlying inflation, which excludes 5 per cent of the highest and lowest price changes, rose to a new series high of 9.7 per cent in February, after remaining flat at 9.0 per cent for three months.This is concerning since there is no government support to help households (especially lower income households, who spend a greater part of their incomes on food) offset this cost. Food inflation grew at an annual rate of 18.2 per cent in February, a significant rise from 16.7 per cent in January – the highest rate for this category observed in over 45 years.This rise was driven by price increases in: restaurants and hotels - largely reflecting price rises in alcohol food and non-alcoholic beverage - in part a consequence of vegetable shortages leading to increased prices and clothing and footwear - which is an expected rise as new stock enters this time of year following the new year sales period. Annual consumer price inflation unexpectedly increased to 10.4 per cent in February from 10.1 per cent in January, following three consecutive months of falling inflation.
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