Business News Asia
Inflation in the United Kingdom reached a 40-year high in June. This has exacerbated the cost-of-living crisis and increased pressure on the Bank of England (BoE) to proactively raise its key interest rate in August.
The U.K. Office for National Statistics (ONS) reported that the consumer price index (CPI) rose 9.4% in June from a year earlier, which was accelerated by a 9.3% increase in fuel prices in June. This was the largest increase since February 1982, following a 9.1% rise in May.
Meanwhile, goods prices have risen much more than wages. The household sector tends to have more difficulties, as inflation is expected to reach 11% in October when energy prices are raised again.
BoE officials are concerned that the rise in inflation could intensify if wage increases and rising commodity costs force companies to continually raise prices
The BoE governor last night hinted at the possibility of a 0.50% rate hike in August as the BoE steps up efforts to bring inflation back to its 2% target. This will be the first time since the BoE became independent of monetary policy in 1997 that rates will be raised by 0.50%.