How the drop in inflation impacts you

One small step for UK inflation, one giant leap for gilts ???? Comments on today's UK inflation data from our team: Guy Foster RBC Brewin Dolphin June’s inflation report will be celebrated widely. After four extremely upside inflation surprises UK inflation undershot estimates. There was very little about the absolute numbers that would give policymakers much comfort. The annual rate of inflation declined but is still at a high level that would have been unthought of two years ago. The monthly increase in CPI was a sedate 0.1% but benefitted from such a big drop in fuel prices, which are beyond the Bank of England’s control. Annual growth of the retail prices index remains in double figures. Despite still high inflation, an undershoot of expectations reassures investors that inflation has not become permanently unhinged from forecasts. This is a reassuring release, especially off the back of more encouraging trends from the US. One swallow does not make a summer, but the US has been a few months ahead of Europe in the current inflation cycle and so hopefully, this presages further benign inflation news. Inflation will seem to decelerate sharply towards the end of the year, reflecting the very sharp price increases from 2022 that will no longer form part of the annual rate. Worth noting is also the outright contraction in UK producer input and output prices which tend to lead CPI. The pound and gilt yields have dropped sharply on the news, as panic UK interest rate increases will seem less urgent now. For those holidaying in America this summer, spending money just got more expensive. #ukcpi #ukinterestrates #ukinflation #boe #bankofengland #mpcinterest #ukeconomy #linkedinnewsuk

Alas, a fall in inflation in June, but the not-so-good news is that UK prices are still on the rise. ?? The big question now is, will the Bank of England (BoE) continue its hiking cycle? With interest rates being the only lever at their discretion (Danny Alexander ?? kindly clarified), we might be wondering how deep the next rate increase will be, or whether the BoE will pause to allow their previous hikes to settle in. ?? On the other hand, is the government really focused on promoting growth, or have they run out of ideas? "Independence" v "Siloism" ?? From a strategic (macro?) governance perspective, we must ponder whether the current independence of the BoE from the government is suitable in today's interwoven and interconnected world that requires swift and hopefully effective action with deep collaboration. ?? Could the current format of the BoE's Monetary Policy Committee (MPC) and the Treasury be accused of "siloism"? Do these institutions have a holistic, complementary view and strategy on how to navigate the challenges of high interest rates and limited growth? Should they, or is independence still critical? ? When is independence useful and justifiable? 27% jump in UK insolvencies ?? Unfortunately, this never-ending interest rate hiking cycle continues to impact SMEs and other businesses that heavily rely on debt, be it overdrafts or fixed/floating loan facilities. ?? Business insolvency in the UK has surged by 27% year on year, as the hiking cycle begins to claim its casualties. Hamper sustainable models and lifestyles From a sustainability standpoint, high interest rates and a sluggish economy will likely discourage businesses from developing and transitioning into sustainable models. ? This could undermine the opportunities and benefits of achieving Net Zero by 2030 and embracing the circular economy. ? SMEs and businesses aiming for sustainable transformation will require greater financial support to maintain the momentum. ?? Moreover, middle- and low-income consumers may reconsider their transition to a sustainable lifestyle. If the BoE and the government struggle to rein in essential food prices, such as bread ?? , milk ?? , and eggs ?? , it becomes challenging to see how sustainable products and services will remain affordable. Indeed, we need to question whether these sustainable offerings are considered discretionary or non-discretionary spending. What do you think? Please share your thoughts. Thanks, Mimi A non-economist perspective ?? #sustainability #costoflivingcrisis #sustainablelifestyle #SMEs #inflation

A faster-than-expected fall in headline CPI to 7.9% for June compared to the 8.7% figure observed in May. The main driver of the slowdown is the large drop seen in petrol and diesel costs, which are more than 20% cheaper than a year ago following the spike triggered by the Russia-Ukraine conflict. Food price inflation has also eased, but the prices for these goods are still 17.3% higher compared to last year. Promising to see that Core inflation (excludes volatile price changes in food and energy) also eased to 6.9% compared to last month’s value of 7.1%. Additionally, producer price inflation has fallen dramatically. In general, producer prices lead consumer prices by roughly 3-4 months, so looking forward we would expect consumer price inflation to fall further later this year as these lower producer prices flow through. The UK is now beginning to catch up with the fall in inflation experienced in other countries – headline inflation in the US fell to 3% and China is experiencing ‘deflation’ risk. These exogenous effects from the drops in inflation of major economies and the fall in energy, food, and input costs (which pass through to consumers with a lag) should accelerate the process in the UK. The Bank of England (BoE) is likely now under less pressure in August to raise its base rate by a significant level and to retain them at a 'higher for longer' level. However, with strong wage growth in recent months the BoE may want to nip any continuation of a wage-price spiral in the bud. However, there is a risk that the country may start to feel the delayed effects of the 13 rate rises and aggressive quantitative tightening from the BoE at the wrong time, which could end up hampering the country’s economic recovery. #inflation #economy #growth #foodinflation #fuelinflation #CPI

How the markets are reacting to today's UK Inflation number.... * Inflation is down 0.8% to 7.9% * Sterling is down 0.7% to $1.2950 * UK 10 Yr Gilt Yield down 4% to 4.15% * UK stocks up 1.5% to 7,570 points The markets have reacted positively to the news on UK Inflation, but is the news really that good? In light of today’s number what with the BoE MPC do at their next meeting on 3rd August??#questionforgroup See today's Poll on my profile page for what the market thinks the BoE will do.... #sterling?#gbp?#ukeconomy?#bankofengland?#boe?#fed?#inflation?#interestrates?#markets?#money?#forex?#economy?#chartstoday?#updata

UK inflation falls more than expected to just under 8%. This was the first downward surprise in 5 months! Finally, a sigh of relief for the UK economy, which has been struggling with more than 8% inflation for about one-and-a-half years now. But let's not forget that the inflation rate is still way above target. Moreover, cumulative inflation since January 2020 has been close to 22% now, much higher than in most other advanced economies (Sweden being the notable exception). The BoE needs to continue tighten monetary policy and will have to keep rates high until mid-next year. The obvious risks are a big housing price correction and a substantial slowdown in the labor market. #macro #monetarypolicy #UK #inflation #rates

Absolute versus relative: The reactions to this morning's UK inflation data are increasingly being pushed into corner solutions: The relativists point to headline and core inflation both coming in below consensus forecasts. The absolutists note that inflation remains high at 7.9%, it is also above other G-7 countries and, on a distributional basis, hits the poor really hard (including on account of the 17% food inflation component). This is not an either/or. Both are right and, together, they critically point to the need to intensify the battle against inflation, using the full range of available economic tools. #economy #UK #inflation

Breaking news: UK inflation falls more than expected to 7.9% in June.

Breaking news: UK inflation falls more than expected to 7.9% in June.

?? Exciting News for Property Investors in the UK! ?? I am delighted to share that UK inflation has fallen more than expected to 7.9% in June 2023, opening up a world of opportunities for property investors. This unexpected development is great news for those looking to enter the property market or expand their existing portfolios. As the saying goes, when the tide turns, it turns fast - and now is the perfect time to capitalise on this favorable trend! Historically, inflation has played a significant role in shaping investment strategies and decisions. It is widely known that high inflation can erode the value of investments, including property assets. However, the recent decline in UK inflation offers a unique advantage for property investors. Let me explain why. 1?? Increased purchasing power: Falling inflation means that the purchasing power of the pound strengthens. As property prices are often linked to the prevailing economic conditions, this downturn in inflation may lead to more attractive buying opportunities. Property investors can now potentially secure prime assets at lower prices, maximizing their returns in the long run. 2?? Favorable borrowing conditions: Lower inflation rates often go hand in hand with lower interest rates. This presents an excellent opportunity for property investors who rely on financing to grow their portfolios. Reduced borrowing costs can significantly improve the profitability of investments, making it easier for individuals to enter the property market or expand their existing holdings. 3?? Anticipated market upturn: As we have witnessed throughout history, the property market tends to be cyclical. After an extended period of high inflation, the decline in inflation could indicate an upcoming market upturn. By getting in now, property investors can position themselves to benefit from the inevitable rebound in property prices and rental demand. It's important to remember that investing in property requires careful consideration and tailored advice from industry experts. As a top investment consultant, I'd encourage you to explore this exciting opportunity with caution. Conduct thorough market research, consult with professionals, and evaluate your investment goals and risk appetite before making any decisions. In summary, the unexpected fall in UK inflation to 7.9% in June 2023 has created a golden window for property investors. By taking advantage of the current market conditions, you could seize lucrative opportunities and set yourself up for long-term success. If you're considering property investment, don't miss out on the potential rewards this promising period offers. Reach out to an experienced investment consultant who can guide you through the process and help you make informed decisions. Happy investing! ?????? #PropertyInvestment #UKPropertyMarket #Inflation #InvestmentOpportunity #MarketTrends #UKPropertyInvestment #InterestRates #BTL

Absolute versus relative: The reactions to this morning's UK inflation data are increasingly being pushed into corner solutions: The relativists point to headline and core inflation both coming in below consensus forecasts. The absolutists note that inflation remains high at 7.9%, it is also above other G-7 countries and, on a distributional basis, hits the poor really hard (including on account of the 17% food inflation component). This is not an either/or. Both are right and, together, they critically point to the need to intensify the battle against inflation, using the full range of available economic tools. #economy #UK #inflation