It has emerged that inflation in Britain has unexpectedly jumped above the Bank of England’s target in May when it hit 2.1%. This is part of a post-lockdown rise in inflation which is expected to increase as Britain emerges from the last fifteen-month economic shutdown.
The increase from April’s 1.5% can largely be explained by citing how weak inflation was in May 2020 when the economy was still under the harshest of restrictions. However, today’s figure represents the first time inflation has gone above the BoE’s 2% target in almost two years. This morning, yields on British government bonds, briefly touching their highest in nearly a month.
This rise in inflation appears to be mirroring what is being seen around the world. One example of this was the United States where annual inflation hit 5.0% in May, which was its highest in almost 13 years.
However, Ambrose Crofton who is the Global Market Strategist at J.P. Morgan Asset Management has reacted to the news in the UK by saying: “Today’s inflation print was much stronger than anticipated and confirms that as the UK economy proceeds in its reopening, inflationary pressures continue to build”.
UNN’s Oliver Down understands that next week will see a Bank of England meeting which will likely shape the direction that policy regarding inflation will take. The BoE had previously said that it expected inflation to hit 2.5% by the end of this year before settling back to its 2% target into 2022.
Whilst the BoE Governor Andrew Bailey is still insistent that this climb in inflation will be temporary, Chief Economist Andy Haldane said only last week that the central bank faced the “most dangerous moment” since the European Exchange Rate Mechanism crisis in 1992.
Current Affairs Correspondent | My name is Oliver Down I am 22, and a staunch brexiteer. I am a Bristolian lad who studied politics in Leicester. I believe in free speech and accurate journalism and I won’t be afraid to give you “the other side” of the story!
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