www.nytimes.com
Open in
urlscan Pro
151.101.1.164
Public Scan
URL:
https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html
Submission: On June 21 via manual from US — Scanned from US
Submission: On June 21 via manual from US — Scanned from US
Form analysis 2 forms found in the DOM
POST https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083
<form method="post" action="https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083" data-testid="MagicLinkForm"
style="visibility: hidden;"><input name="client_id" type="hidden" value="web.fwk.vi"><input name="redirect_uri" type="hidden"
value="https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083"><input name="response_type" type="hidden"
value="code"><input name="state" type="hidden" value="no-state"><input name="scope" type="hidden" value="default"></form>POST https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083
<form method="post" action="https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083" data-testid="MagicLinkForm"
style="visibility: hidden;"><input name="client_id" type="hidden" value="web.fwk.vi"><input name="redirect_uri" type="hidden"
value="https://nytimes.app.goo.gl/?link=https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html&apn=com.nytimes.android&amv=9837&ibi=com.nytimes.NYTimes&isi=284862083"><input name="response_type" type="hidden"
value="code"><input name="state" type="hidden" value="no-state"><input name="scope" type="hidden" value="default"></form>Text Content
Skip to content Sections SEARCH Business SUBSCRIBE FOR $1/WEEKLog in Wednesday, June 21, 2023 Today’s Paper SUBSCRIBE FOR $1/WEEK Business|U.K. Inflation Remains Stuck at 8.7 Percent https://www.nytimes.com/2023/06/21/business/uk-inflation-may.html * Give this article * * Advertisement Continue reading the main story Supported by Continue reading the main story U.K. INFLATION REMAINS STUCK AT 8.7 PERCENT The rate, which had been expected to edge lower in May, shows that Britain’s cost-of-living crisis persists, and is likely to prompt the Bank of England to raise interest rates again. * Give this article * * * Read in app Annual change in Britain’s Consumer Prices Index Source: Office for National Statistics By The New York Times By Eshe Nelson Reporting from London June 21, 2023Updated 8:24 a.m. ET Britain’s inflation rate held steady in May, frustrating expectations that price increases would slow down, according to data released Wednesday, the day before the country’s central bank is widely expected to raise interest rates again. Consumer prices rose 8.7 percent from a year earlier, the same as in April, the Office for National Statistics said. Economists had forecast it would dip slightly. The data is likely to compound concerns that Britain’s cost-of-living crisis may intensify in the coming months as mortgage holders confront the burden of higher interest rates pushed through to tackle stubbornly strong inflation. The Bank of England on Thursday is expected to lift interest rates for a 13th consecutive time, by a quarter-point to 4.75 percent, the highest since early 2008. Last week, wage data showed pay growing faster than expected. On Wednesday, the statistics agency said core inflation, which excludes energy and food prices and is used to assess how deeply inflation is embedding in an economy, rose to 7.1 percent in the year through May, the fastest pace since 1992. Services inflation, an indicator that is closely watched by policymakers, climbed to 7.4 percent, from 6.9 percent in April. Advertisement Continue reading the main story “The overwhelming impression is that this is a disappointing set of numbers that shows broad-based strength” in prices, Sandra Horsfield, an economist at Investec, wrote in an analyst note. “This is simply not good enough.” The rise in core inflation is “something that may cause some concern,” Grant Fitzner, the chief economist at the statistics agency, told the BBC. MORE ON BRITAIN * Boris Johnson: Britain’s former prime minister, who quit as a lawmaker in the face of a possible suspension for misleading statements about pandemic gatherings, has a new gig: Daily Mail columnist. * Phillip Schofield Scandal: The resignation of the ITV television anchor, followed by his admission of an affair with a younger colleague, has gripped the British media for weeks. * Amazon: Over 700 workers at a warehouse in Coventry, in the Midlands of England, joined a union and are seeking recognition for it to negotiate with the company. * Abortion Case: A woman’s sentencing to prison this week for illegally using abortion pills to end a 32- to 34-week pregnancy prompted a debate in England over the state of its abortion laws. That’s because it has been pushed higher by price increases in services, such as at restaurants and hotels, much of it reflecting higher wage costs for companies, Mr. Fitzner said. “Services prices are quite sticky,” he said. “It can take longer for them to pick up but likewise longer for them to unwind as well.” This is leading to worries that overall inflation will be much slower to fall that it was to rise, he added. And that is what Britain is experiencing, as inflation data over the past few months has repeatedly defied expectations and stayed higher than predicted. Advertisement Continue reading the main story Britain’s headline inflation rate has slowed from a peak of 11.1 percent in October, but it’s still uncomfortably high, especially compared with its international peers. In the United States, the Consumer Price Index rose 4 percent in May from the year before, and in the eurozone, inflation averaged 6.1 percent last month for the 20 countries that use the euro. The Federal Reserve has paused its interest rate increases, and traders are betting that the European Central Bank will raise rates just once or twice more; in Britain, though, investors are predicting the central bank will be forced to raise rates for longer to stamp out inflation. “We are in a situation now where markets are saying they’ve lost faith and that requires a big reaction from the bank,” said Andrew Goodwin, an economist at Oxford Economics. The central bank “needs to acknowledge that the game has changed,” he said, adding that he wouldn’t be surprised if the central bank raised rates by half a point on Thursday. Andrew Bailey, the governor of the Bank of England, said last week that policymakers still expected the inflation rate to come down, but “it’s taking a lot longer than expected.” Mr. Bailey’s predecessor, Mark Carney, said recently that Britain’s departure from the European Union was part of the reason Britain was suffering from stubbornly high inflation. There were other economic shocks at the same time, such as rising energy prices following Russia’s invasion of Ukraine, but Brexit is a “unique” part of the adjustment that will take years to resolve, he said. “We laid out in advance of Brexit that this will be a negative supply shock for a period of time and the consequence of that will be a weaker pound, higher inflation and weaker growth,” he told The Daily Telegraph last week. Advertisement Continue reading the main story Traders are betting that the Bank of England’s interest rate could reach 6 percent by early next year. These expectations are shown through rising yields on government bonds, which now exceed the levels reached during Liz Truss’s brief but turbulent stint as prime minister last fall. In response, mortgage rates are rising too. Last weekend, the average rate for a two-year fixed-rate mortgage hit 6 percent for the first time this year. Last month, the central bank warned that many mortgage holders had not experienced the cost of higher interest rates yet. About 1.3 million households are expected to reach the end of their fixed-rate term by the end of the year, prompting a reset in the rate that applies to their loan. And the average mortgage holder in that group will see their monthly interest payments increase about 200 pounds ($255) a month, or £2,400 over the course of a year, if their mortgage rate rises 3 percentage points, which is what mortgage quotes suggested last month, the bank said. The additional financial strain follows months of higher prices, from energy bills to groceries. Food and nonalcoholic drink prices rose 18.3 percent in May from a year earlier, data showed on Wednesday, a slight slowdown from previous months when food inflation hit a 45-year high. The moderation in food and fuel prices was offset by rising prices at restaurants and hotels and for secondhand cars and live music events. “We know how much high inflation hurts families and businesses across the country,” Jeremy Hunt, the chancellor of the Exchequer, said in a statement on Wednesday, adding that the government’s plan to halve the rate of inflation would be the best way to keep costs and interest rates down. Advertisement Continue reading the main story “We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy,” he said. In January the government, led by Prime Minister Rishi Sunak, vowed to halve inflation by the end of the year, which would mean a rate of about 5 percent, amid waves of public and private sector strikes from workers frustrated by declining living standards. When that promise was made, it seemed almost guaranteed to succeed based on economic forecasts. But as the months have worn on, inflation has been harder to slow down than expected and that pledge is now at risk of being missed. Adding to the government’s challenges, separate data published on Wednesday estimated that Britain’s public sector debt exceeded 100 percent of gross domestic product for the first time since 1961, as the government paid out more money for energy support programs and social benefits to mitigate the cost-of-living crisis. Eshe Nelson is a reporter in London, where she writes about companies, the British economy and finance. @eshelouise * Give this article * * * Read in app Advertisement Continue reading the main story SITE INDEX SITE INFORMATION NAVIGATION * © 2023 The New York Times Company * NYTCo * Contact Us * Accessibility * Work with us * Advertise * T Brand Studio * Your Ad Choices * Privacy Policy * Terms of Service * Terms of Sale * Site Map * Canada * International * Help * Subscriptions READ THIS ARTICLE FOR FREE, OR GET EVERYTHING WE OFFER. CREATE A FREE ACCOUNT. ACCESS ADDITIONAL ARTICLES FOR NO COST, NO CREDIT CARD INFORMATION NEEDED. FREE Create a free account Already have an account? Log in. NEW OFFER ENJOY ALL OF THE TIMES. ALL OF OUR NEWS COVERAGE, PLUS RECIPES, GAMES, PRODUCT REVIEWS, AND MORE. $6.25 $1/WEEK BILLED AS $4 EVERY 4 WEEKS FOR YOUR FIRST YEAR. Subscribe now Cancel or pause anytime. -------------------------------------------------------------------------------- Offer for a New York Times All Access subscription; current subscribers not eligible. Subscription excludes print edition. Your payment method will automatically be charged in advance the introductory rate of $4 every 4 weeks for 1 year, and after 1 year the standard rate of $25 every 4 weeks. Your subscription will continue until you cancel. Cancellation takes effect at the end of your current billing period. Taxes may apply. Offer terms are subject to change. © 2023 The New York Times Company Help Feedback