The Annual inflation rate in the UK is surprisingly on the downside as it is seen as 9.9%, down from July’s 10.1, disappointing estimates at 10.2 %. Its dwindling was said to have been fostered by housing and household services, transport, food, and non-alcoholic beverages.
However, this print might not have a tangible influence on the BOE policy. The BOE has to continue its hawkish trajectory or risk further downside for the Pound and continuous inflation as gas shortages threaten power cuts in winter. Yesterday’s employment data saw worker shortages persist and demand reducing.
The Bank of England is in a dilemma as the US Fed is prepared to persist in its rate hike move after the CPI and the ECB’s rate hike last week. The bank is most interested in wage growth, which can push higher if the worker shortages continue, adding to the inflation issues.
Positive news concerning the unemployment rate is that it came in at a new low of 3.6%, the lowest level since 1974. Therefore, the numbers seem positive. Yet, the reduction in the unemployment rate appears to have been driven by a rise in the number of inactive people. The workers classified as long-term sick has risen at a startling pace, with 150000 being added in the last two months.