While the economy began strongly this year, on Wednesday saw another example of surprise for markets in the wrong direction.
The economy slowed down again in May, and now Inflation has intensified Hope faster than expected. This is expected to be above the target level of Bank of England until autumn.
For consumers, still from years of high prices and recent pickups in food prices, the new number is less surprising, confirming their normal day-to-day challenges.
At the top of it, and for some people is simply important, the bounce in inflation complicates the bank rate cut plan.
Investors consider it too much that the current will come down at rates again in August from 4.25%.
Now there is definitely a feeling of renewed caution.
A pre -rate setter in the bank, economist Andrew punishment, even said that it would be “non -reservations” to cut interest rates next month.
Expectations remain that the cut in August and one and later will move forward in the year.
But the bank will have to explain why it is looking beyond this current increase in inflation, up to 2% target in next year’s expected drop-back.
This would mean the return of old questions about whether the UK is more inflation-stricken than other countries, for example, due to increasing wages and tax costs in the form of high prices.
The market of a weak jobs is another part of the discussion. The latest employment figures will be published on Thursday.
If, as expected, they show a continuous decline in vacancies, it strengthens the logic of moving with rates. Bloomberg is predicting 4.6% to 4.9% unemployment rate reported last month.
But it is important to keep all the figures in perspective as usual.
True, other major economies have not seen a uniform bounce in inflation. The latest inflation rate of eurosone is just 2%. But inflation is nowhere near the high level of energy crisis, and in autumn will come down as a fall in energy prices.
Development is certainly slow, but we are not in recession, and very latest activity figures suggest recovery in some areas.
