Reaction to UK CPI 18/05/22
by Shafiq Shabir
Head of Electronic Trading, Intertrader
Today’s inflation figures, once again, make for eye-watering but predictable reading. We already knew that the Bank is now looking at a peak inflation rate of five times its 2% target, so as bad as these figures are, the worst is very much still on its way. We’ll likely see inflation peak beyond 10% when the energy price cap is raised once again in October – a rate not seen since the early 1980s.
Not helped by Andrew Bailey’s warning that food prices were reaching ‘apocalyptic’ levels, general sentiment amongst the public could really be the nail in the coffin for a UK recession this year. People are naturally already tightening their belts, but comments like these will only exacerbate public panic and drive spending down even further.
It’s clear that Threadneedle Street and government are trying to shirk responsibility for runaway prices, but it remains certain that one – or both – will need to act quickly and drastically in order to avoid the potentially catastrophic consequences of a full-blown recession.
Published: 18 May 2022
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