Prices Fly Higher In The Great British Take-Off

Image source: Olaf Speier, Zerbor - Shutterstock, Asli, dall-e 2

What's going on?

Data out on Wednesday showed that the UKs inflation broke double digits again last month.

What does this mean?

Hard-pressed Brits mightve hoped their luck was about to change when rapidly rising prices started slowing down back in August. But new data out on Wednesday signals inflation shows no sign of letting up: food prices rose by 15% from last year, their biggest uptick for decades, while furniture and other household goods prices were up 11%.Those increases were big enough to completely dwarf some well-needed let ups in prices for petrol and second hand cars, and meant consumer prices overall still rose 10.1% in September from the same time last year, matching this Julys 40-year high.

Why should I care?

For markets: The Bank of Englands back for more.
Now that the governments done a U-turn on its chaos-inducing tax cuts, the Bank of England (BoE) will be able to focus its energy on tackling inflation. Thatll probably involve bringing out the big guns, especially in light of Septembers inflation data: in fact, some economists think a 0.75 percentage-point interest rate hike is on the cards next month. Thats on top of the BoEs announcement this week that in November it will start selling some of the nearly $1 trillion worth of government bonds it amassed while supporting the economy over the years. That should drive bond prices down, push up their yields, and further increase the overall cost of borrowing.

Zooming out: Nice one, Nestl.
You can thank Nestl for some of those rising food prices. The worlds biggest food maker said that it upped its prices by a hefty 9.5% last quarter versus the same time in 2021, in a bid to limit increasingly pricey ingredients and transport costs eating into its profit. But consumers wallets will only take so much, with Nestl revealing it sold a lower volume of goods as a result.

Originally posted as part of the Finimize daily email.

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