KPMG UK has shared insights following the latest inflation figures.
Yael Selfin, Chief Economist at KPMG UK comments on inflation data by noting that headline inflation rises above “target with upward risks to the outlook on the increase”
Selfin from KPMG UK added that while the rise in headline inflation was expected, “reflecting Ofgem’s increase to the energy price cap, it may not be a one-off upward risk.”
They also mentioned that inflation is set to “continue to rise over the coming months, driven by a pick-up in goods inflation, a more expansionary fiscal policy and less clear external environment.” They further noted that today’s data will strengthen the Bank of England’s case “to maintain its cautious approach.”
They expect the Bank to hold interest rates in next month’s meeting as it assesses the “second-round effects of higher energy prices and the emerging upward risks to the outlook.”
Selfin also noted that despite today’s increase in headline inflation, a recent slowdown in economic activity “could put downward pressure on services inflation.”
However, they concluded that higher labor costs could be at least “partially passed on and the growing risk of trade fragmentation could see the pound weakening further.”
In another recent update, a response was shared to the FCA’s Advice Guidance Boundary Review proposals for closing the advice gap.
Philip Deeks, Director and Head of KPMG’s Regulatory Insight Centre, said that this is a welcome initiative that should “address the growing demand and need for helpful guidance and targeted support for UK adults.”
Deek added that firms will be able to help customers more “proactively with their financial choices which will lead to better outcomes.” They also mentioned that these proposed new rules and clarifications “will also make it easier for firms to run successful businesses and create new commercial opportunities.”
Deek also stated that although further work will be required to “ensure the associated governance and oversight is correctly calibrated to build confidence by effectively managing the associated conflicts of interest between commercial gains and customer needs.”