Tomorrow, the UK government will update the country on the status of inflation. The last reading, released in June, showed an inflation rate of 2.8% – higher than the benchmark target of 2% inflation – the same goal held in the US.
Last November, inflation topped 9%, a number policymakers have fought to drive lower. High inflation is a hidden tax on everyone, as your pound sterling can’t purchase as much as it could in the past.
Julien Lafargue, Chief Market Strategist at Barclays Private Bank, has shared his expectations for tomorrow’s report, which can tip the hand of the Bank of England’s future rate changes.
“On a year-on-year basis, we expect UK headline inflation to have increased in July, driven by the sharp decrease in energy prices a year ago. Encouragingly, core prices should have moved in the opposite direction with a slight moderation in July, driven by a modest improvement in services inflation,” said Largargue. “Overall, the path of slow and gradual disinflation remains intact, in our view. As a result, we continue to expect the Bank of England to wait before cutting interest rates again, with a move potentially in November rather than in September.”
Global economies continue to struggle due to many reasons – including the high cost of living and doing business. While some observers see a “soft landing” in the future as central banks cut rates, some remain concerned about a possible recession or “hard landing.”