This is a direct result of the reopening of the British economy after several months of confinement linked to the COVID crisis. For the first time since July 2019, inflation in the UK rose to 2.1% in May, surpassing 2% for the first time, according to data from the National Bureau of Statistics (ONS). Core inflation is at its highest level since August 2018.
A situation that is in stark contrast to the situation almost a year ago. The pandemic dealt a severe blow to the British economy, so much so that inflation reached its lowest level since 2015 (0.2%) in August 2020.
Fuel, food and clothing
So the bad news looms large for the British government, which has just announced that it is postponing the final discount scheduled for June 21 by a month due to the rise of the Delta version in the country. Figures unveiled by the ONS this Wednesday show inflation is rising sharply (from 1.6% to 2.1% in a month), but also that it is now well above the target that the ‘Bank of England’ is set.
“Inflation is above 2% for the first time since the summer of 2019,” said ONS chief economist Grant Fitzner. A rise which, according to him, was “led by fuel prices, which declined in the same period last year, but climbed this year due to the rise in crude oil prices.”
Other factors that pushed inflation upward: the catering sector and the clothing sector in particular. “Clothing prices have also contributed to the increase,” especially because distributors have limited promotions, explains Grant Fitzner.
reassuring bank of england
The Bank of England wants to be reassured if the announcement comes at a time of concern over rising prices around the world. The latter had anticipated this jump in prices, which it considers temporary and is therefore unlikely to question its very favorable monetary policy. Even if it doesn’t rule out a rate of closer to 2.5% by the end of the year.
However, neither the Bank of England nor leading economists expected the hike announced on Wednesday. The forecast consensus was closer to 1.8%, according to Bloomberg.