- Story Log
User | Time | Action Performed |
---|---|---|
-
Haskel: What's driving inflation? Wages, profits, or energy prices?
- Comments
- Subscribe
-
- Older Stories
I am delighted to be at the Peterson Institute here in Washington DC today. I will talk today about the UK economy and monetary policy, with some comparison to the US and euro area. Let me summarise my main points at the outset. 1. My reading of official UK inflation data is that the contribution of rising business profits to recent inflation is small. 2. Looking forward, the labour market is still very tight in an absolute sense: for example, the vacancies-to-unemployment ratio remains historically very high, as does unit wage growth. 3. I prefer to lean against the risks of inflation momentum. As difficult as the economy’s current conditions are, embedded inflation would be worse. Further increases in Bank rate cannot be ruled out. Inflation in the UK: costly energy and a tight labour market Since this is an international audience, let me start by giving you a quick overview of the UK inflation environment. The headline measure of inflation in the UK, the Consumer Price Index (CPI), has risen 8.7% in the year to April 2023. This is down from its recent peak of 11.1% in December 2022, which was the highest on record since the CPI officially began in 1988. Historic modelled estimates from the UK Office for National Statistics (ONS) suggest that inflation in the UK was last higher in February 1982. The current high inflation in the UK is due to a range of factors, which we explore shortly. Chart 1 shows inflation “component accounting”. Based on the components of the CPI basket, services and energy were each accounting for about 3pp of inflation in the early part of this year, with ‘food and non-alcoholic beverages’ and ‘other go post at 12:32pm: BOE'S HASKEL: FURTHER RATE HIKES CAN'T BE RULED OUT. post at 12:31pm: BOE'S HASKEL: I PREFER TO LEAN AGAINST RISKS OF INFLATION. post at 12:32pm: BOE'S HASKEL: THE LABOR MARKET IS STILL VERY TIGHT IN THE UK. post at 12:33pm: BOE'S HASKEL: AS DIFFICULT AS OUR CURRENT CIRCUMSTANCES ARE, EMBEDDED INFLATION WOULD BE WORSE. WE'RE NOT SEEING EMBEDDED INFLATION YET.
Urgent action is needed to reduce greenhouse gas emissions and prevent the most disastrous effects of climate change. This is why the EU aims to reduce such emissions by 55% by ...
post at 11:31am: ECB'S KNOT: WE NEED RATE HIKES IN JUNE AND JULY AND OPEN MINDED ON SEPTEMBER. post at 11:31am: ECB'S KNOT: THE ECB WILL MAINTAIN RATES AT PEAK FOR CONSIDERABLE AMOUNT OF TIME. post at 11:32am: ECB'S KNOT: THERE IS NO INDICATION THAT UNDERLYING INFLATION IS ABATING.Interest rates will stay high for 'quite a long time,' warns Bank of the Netherlands president Industrial production in the euro zone is contracting and raw materials are cheaper than a year ago. Do you think high inflation can persist? The outlook for inflation is very uncertain, but we are currently seeing second-round effects. Energy prices have trickled down to other items in the “shopping basket”. Core inflation is currently our main concern and it is not yet showing signs of slowing down, especially in the services sector. Admittedly, manufacturing activity seems to be shrinking. But so far we are not seeing a slowdown in the services sector. Most services are labor intensive and wage developments are clearly one of the main upside risks to the inflation outlook.
-
- Newer Stories
For all the concern about the US dollar losing its dominance in international trade and the finance world, Moody’s Investors Service has a message: the greenback will likely ...
post at 1:35pm: BoE’s Haskel: If We Do See Evidence of More Inflation Persistence, We Will Tighten Policy
State-backed Chinese hackers have been targeting U.S. critical infrastructure and could be laying the technical groundwork for the potential disruption of critical communications ...
- Story Stats
- Posted: May 25, 2023 12:30pm
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 825
- Linked event: