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Reaction to UK CPI (16/02/22)

by Shafiq Shabir
Head of Electronic Trading, Intertrader

Consumer prices have once again been driven up by a perfect storm of high energy costs, resurgent post-Omicron demand for goods and services, alongside persistent supply chain disruption. No longer a looming prospect, households across the UK will now find themselves firmly under the effects of a cost of living squeeze. Yesterday’s jobs data has brought this situation into greater focus, with wages in the UK now lagging behind inflation.

While the last month has seen record fuel prices, it’s very likely these records will be surpassed in the next few months, with National Insurance contributions and the energy price cap also set to rise in April. This will place even more upwards pressure on inflation, the Bank of England predicting a peak of around 7%, far beyond its 2% target.

All eyes will yet again be on the Bank of England next month, as today’s data only strengthens the narrative that central banks will be compelled to raise rates multiple times this year. In the meantime, we expect market traders will remain wary of riskier and more speculative assets.

Published: 16 February 2022

You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is a macro summary of scheduled news announcements and is not investment advice, independent research or an investment recommendation. The information provided is believed to be accurate at the date the information is produced.

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