This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2017/jun/13/uk-inflation-hard-brexit-pound-sterling-ftse-business-live
The article has changed 12 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Wage squeeze worsens as UK inflation rate jumps to 2.9% – business live | Wage squeeze worsens as UK inflation rate jumps to 2.9% – business live |
| (35 minutes later) | |
| 11.53am BST | |
| 11:53 | |
| Today’s Evening Standard is splashing on the rise in inflation, and blaming it on the EU referendum. | |
| Our first edition @EveningStandard has today's 2.9% rise in inflation caused by Brexit devaluation + @tombradby on May & latest on Lions pic.twitter.com/d9P9mypK7W | |
| It warns that there is now “clear blue water” between wages and inflation, adding that: | |
| There was growing concern in the City today that the hit to consumer spending power combined with political uncertainty following the loss of Theresa May’s Commons majority will further undermine already slowing economic growth. | |
| Strangely, the front page doesn’t mention that real wages also fell through most of their editor’s time as chancellor (2010-2016)..... | |
| Updated | |
| at 11.56am BST | |
| 11.32am BST | |
| 11:32 | |
| Resolution: Pay squeeze will be longer and deeper than feared | |
| There’s a danger that the political deadlock in Westminster could push inflation higher in the months ahead, warns Stephen Clarke, economic analyst at the Resolution Foundation. | |
| And that could be particularly bad news for poorer families, if essential purchases like food and clothes keep climbing while benefits remain capped. | |
| Clarke says: | |
| “The latest rise in inflation adds further pressure to already shrinking pay packets. The uncertain political environment, coupled with Brexit negotiations beginning in six days’ time, is already having an impact on sterling and could create further inflationary pressures down the track. | |
| “The latest rise in inflation will be a double blow to low-income working families, who are also seeing their tax credits fall in value as they have been frozen in cash terms. Many will wonder whether the ‘end of austerity’ announced by the Prime Minister last night could mean a softening of the ongoing benefits freeze. | |
| “With no sign yet of pay settlements responding to rising inflation, Britain’s renewed pay squeeze looks set to be longer and deeper than many originally expected.” | |
| The pay squeeze is set to worsen as inflation rises and wage growth remains around 2 per cent pic.twitter.com/deaI4139pv | |
| Housing, clothing, food and drink responsible for rising inflation in recent months – likely to hit the least well off the most pic.twitter.com/wqq21xRrqr | |
| 11.22am BST | 11.22am BST |
| 11:22 | 11:22 |
| Ben Lord, who manages M&G’s UK Inflation Linked Corporate Bond Fund, predicts that CPI inflation will peak at 3% later this year. | Ben Lord, who manages M&G’s UK Inflation Linked Corporate Bond Fund, predicts that CPI inflation will peak at 3% later this year. |
| He also believes the Bank of England will resist any pressure to raise interest rates in response: | He also believes the Bank of England will resist any pressure to raise interest rates in response: |
| At this point, with such high uncertainty about the direction of travel into Brexit negotiations, but with very significant downside risks, it seems extremely unlikely the Bank of England will tighten policy at this point. | At this point, with such high uncertainty about the direction of travel into Brexit negotiations, but with very significant downside risks, it seems extremely unlikely the Bank of England will tighten policy at this point. |
| With so little evidence of domestic inflation pressures, and with most inflation coming from ‘transient’ and exogenous forces, governor Mark Carney will look through CPI at 3%, 4% even 5% perhaps. | With so little evidence of domestic inflation pressures, and with most inflation coming from ‘transient’ and exogenous forces, governor Mark Carney will look through CPI at 3%, 4% even 5% perhaps. |
| In fact, if Brexit negotiations commence poorly, and if the government can’t get anything done without a workable majority and now with a viable and sizeable opposition, I would still argue that Carney’s last move at the helm may be in the looser direction. | In fact, if Brexit negotiations commence poorly, and if the government can’t get anything done without a workable majority and now with a viable and sizeable opposition, I would still argue that Carney’s last move at the helm may be in the looser direction. |
| 11.06am BST | 11.06am BST |
| 11:06 | 11:06 |
| Britain’s inflation rate has been driven higher by the slump in the pounce since June’s referendum, tweets Conservative MP George Freeman: | Britain’s inflation rate has been driven higher by the slump in the pounce since June’s referendum, tweets Conservative MP George Freeman: |
| This is the reality of the devaluation of the £ post Brexit: rising cost of living & falling earnings = less money in people's pockets. https://t.co/nSQxD6VUvm | This is the reality of the devaluation of the £ post Brexit: rising cost of living & falling earnings = less money in people's pockets. https://t.co/nSQxD6VUvm |
| Freeman argued we should remain in the EU. | Freeman argued we should remain in the EU. |
| 10.49am BST | 10.49am BST |
| 10:49 | 10:49 |
| Hannah Maundrell, editor in chief of money.co.uk, has sent over some advice on coping with inflation: | Hannah Maundrell, editor in chief of money.co.uk, has sent over some advice on coping with inflation: |
| check you’re on a fixed rate energy tariff (one that guarantees the price you pay per unit) and if not switch | check you’re on a fixed rate energy tariff (one that guarantees the price you pay per unit) and if not switch |
| make sure your savings are earning an interest rate that’s higher than the rate of inflation – otherwise they’ll lose buying power over time – you might need to think about high interest current accounts | make sure your savings are earning an interest rate that’s higher than the rate of inflation – otherwise they’ll lose buying power over time – you might need to think about high interest current accounts |
| shop around for food and fuel so you’re not paying any more than you need to | shop around for food and fuel so you’re not paying any more than you need to |
| check whether you could cut your mortgage repayments by switching to a fixed rate deal if you’re on your lender’s SVR | check whether you could cut your mortgage repayments by switching to a fixed rate deal if you’re on your lender’s SVR |
| 10.38am BST | 10.38am BST |
| 10:38 | 10:38 |
| Child poverty group: End welfare freeze now | Child poverty group: End welfare freeze now |
| The Child Poverty Action Group is urging the government to help struggling families cope with the ravages of inflation. | The Child Poverty Action Group is urging the government to help struggling families cope with the ravages of inflation. |
| Chief executive Alison Garnham says: | Chief executive Alison Garnham says: |
| “Unless there’s an urgent re-think of the current freeze on benefits, the living standards of ordinary families will slip and slide downwards with serious consequences, particularly for children. Families are saying they can’t manage. They need some leeway. Now is the time to ensure that benefits for working and non-working families once again reflect their needs and so rise with inflation. | “Unless there’s an urgent re-think of the current freeze on benefits, the living standards of ordinary families will slip and slide downwards with serious consequences, particularly for children. Families are saying they can’t manage. They need some leeway. Now is the time to ensure that benefits for working and non-working families once again reflect their needs and so rise with inflation. |
| “The failure to uprate benefits in line with inflation is the single biggest driver behind child poverty rising to 4 million and why it’s set to rise to over 5 million by the end of the new parliament.” | “The failure to uprate benefits in line with inflation is the single biggest driver behind child poverty rising to 4 million and why it’s set to rise to over 5 million by the end of the new parliament.” |
| 10.32am BST | 10.32am BST |
| 10:32 | 10:32 |
| This chart from Sky News’s Ed Conway shows how Britain is now experiencing its second real wage squeeze since the financial crisis: | This chart from Sky News’s Ed Conway shows how Britain is now experiencing its second real wage squeeze since the financial crisis: |
| Wages (red) vs inflation (blue). Already the biggest real wage squeeze in two centuries. Now intensifying again. Britons are getting poorer… pic.twitter.com/UdJSuAR6jY | Wages (red) vs inflation (blue). Already the biggest real wage squeeze in two centuries. Now intensifying again. Britons are getting poorer… pic.twitter.com/UdJSuAR6jY |
| The Telegraph’s Ben Wright points out that inflation is higher than the City, or the Bank of England, expected: | The Telegraph’s Ben Wright points out that inflation is higher than the City, or the Bank of England, expected: |
| UK inflation hits 2.9% in May. Higher than wage growth (2.1%), consensus fcast (2.7%), & BoE fcast for peak inflation (2.8% in Q4 07) | UK inflation hits 2.9% in May. Higher than wage growth (2.1%), consensus fcast (2.7%), & BoE fcast for peak inflation (2.8% in Q4 07) |
| 10.23am BST | 10.23am BST |
| 10:23 | 10:23 |
| Maike Currie, investment director for personal investing at Fidelity International, says inflation has hit “eye-watering” levels. | Maike Currie, investment director for personal investing at Fidelity International, says inflation has hit “eye-watering” levels. |
| “Rising prices coupled with lacklustre earnings growth means our wages aren’t keeping up with the rising cost living. Our real income are being squeezed and we’re witnessing this impacting UK consumer spending, which fell for the first time in nearly four years in May as consumers tightened their belts. This is bad news for an economy which relies on confident consumers spending on goods and services - already we are seeing signs of a stagnating economy as confidence among companies and consumers falter. Election result paralysis will only add to the UK economy’s woes. | “Rising prices coupled with lacklustre earnings growth means our wages aren’t keeping up with the rising cost living. Our real income are being squeezed and we’re witnessing this impacting UK consumer spending, which fell for the first time in nearly four years in May as consumers tightened their belts. This is bad news for an economy which relies on confident consumers spending on goods and services - already we are seeing signs of a stagnating economy as confidence among companies and consumers falter. Election result paralysis will only add to the UK economy’s woes. |
| Readers may remember that inflation was rather higher back in the 1970s -- but the key point is that wages aren’t keeping pace. | Readers may remember that inflation was rather higher back in the 1970s -- but the key point is that wages aren’t keeping pace. |
| Currie explains why inflation is a concern: | Currie explains why inflation is a concern: |
| “Inflation never seems like a problem until suddenly it is and while it may be good news for borrowers, as it erodes the value of their debts, it has detrimental implications for savers, investors and retirees, chipping away at the value of future interest and dividend payments and eroding the worth of your capital pot. Once pricing pressures become entrenched, consumers’ feel the pain, businesses don’t invest and the stock market gets worried. | “Inflation never seems like a problem until suddenly it is and while it may be good news for borrowers, as it erodes the value of their debts, it has detrimental implications for savers, investors and retirees, chipping away at the value of future interest and dividend payments and eroding the worth of your capital pot. Once pricing pressures become entrenched, consumers’ feel the pain, businesses don’t invest and the stock market gets worried. |
| 10.17am BST | 10.17am BST |
| 10:17 | 10:17 |
| TUC: Government must act | TUC: Government must act |
| TUC General Secretary Frances O’Grady says the government must respond to the wage squeeze by ending the 1% cap on public sector pay rises: | TUC General Secretary Frances O’Grady says the government must respond to the wage squeeze by ending the 1% cap on public sector pay rises: |
| “The election showed that working people are struggling. And the biggest price rises in four years won’t provide any comfort. | “The election showed that working people are struggling. And the biggest price rises in four years won’t provide any comfort. |
| “Working people are still £20 a week off worse, on average, than they were before the crash – and now rising prices are hammering their pay packets again. | “Working people are still £20 a week off worse, on average, than they were before the crash – and now rising prices are hammering their pay packets again. |
| “The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK. | “The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK. |
| “And it’s time to lift the artificial pay restrictions in the public sector. Our hardworking nurses and teachers are long overdue a pay rise.” | “And it’s time to lift the artificial pay restrictions in the public sector. Our hardworking nurses and teachers are long overdue a pay rise.” |
| UK #inflation rises unexpectedly in May to 2.9%, highest since June 2013 pic.twitter.com/9iz81wPU0J | UK #inflation rises unexpectedly in May to 2.9%, highest since June 2013 pic.twitter.com/9iz81wPU0J |
| 10.11am BST | 10.11am BST |
| 10:11 | 10:11 |
| Sign up to our email | Sign up to our email |
| Guardian Business has launched a daily email. | Guardian Business has launched a daily email. |
| Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day. | Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day. |
| For your morning shot of financial news, sign up here: | For your morning shot of financial news, sign up here: |