{"id":2557,"date":"2023-07-19T08:44:52","date_gmt":"2023-07-19T07:44:52","guid":{"rendered":"https:\/\/hcfx.sofyma.com\/?p=2557"},"modified":"2023-08-11T16:30:59","modified_gmt":"2023-08-11T15:30:59","slug":"inflation-eases-as-markets-consider-boes-next-move","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/inflation-eases-as-markets-consider-boes-next-move\/","title":{"rendered":"Inflation Eases as Markets Consider BoE\u2019s Next Move"},"content":{"rendered":"
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This morning, data from the ONS showed that UK headline inflation has slowed to its lowest level since March 2022. This came as the figure hit 7.9%, missing expectations of 8.3% and marking a considerable slowdown from last month\u2019s print of 8.7%. This also represents a significant slowdown from last October\u2019s 11.1% print, which represented the highest level of inflation in over three decades. \u00a0 The fall in headline inflation over June was primarily driven by easing fuel costs, as wholesale energy prices continued to retreat.<\/p>\n

Core inflation also slipped to 6.9% on an annualised basis, falling 0.2 percentage points from last month\u2019s print. June\u2019s slowdown follows May\u2019s figure which showed core inflation rising 30bps as the index hit its highest level since 1992. Given that this figure strips away the volatile indexes of food and energy, economists have continued to assess how this is indicative of the prevalence of \u2018sticky\u2019 inflation \u2013 which is harder to bring down. As such, while core inflation has<\/p>\n <\/div>\n

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eased, it nonetheless remains close to historic highs and therefore continued to cause a further headache for Threadneedle Street, Westminster, and the UK\u2019s 22 million households.<\/p>\n

The easing of inflation has seen money markets downwardly revise their rate hike expectations from the Bank of England. As such, the implied terminal rate is now below 6% – a sharp downward revision from when markets were forecasting a terminal rate of around 6.5%. Money markets have however continued to fully price in a 25bps rate hike, though the jury is out on whether Threadneedle Street may opt for a 50bps hike, to bring the BoE\u2019s benchmark policy rate to 5.5%. As such, all eyes are on Threadneedle Street at 12-noon on 8 August where the Bank of England will make their latest interest rate announcement and provide monetary guidance.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Eyes Turn to Spanish Elections<\/h2>\n <\/div>\n
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Spain goes to the polls this weekend in a somewhat bizarre and pretty interesting election: The surprise election was called by the current PM after his party was hammered in local elections back in May. The snap election calling was a tactic to stop opposition parties continuing their calls and deriding the government who is on the back foot following the local elections \u2013 it also gives the opposition parties less time to work out their differences and try to narrow the gap between their messaging, in a bid to get on the front foot for creating a coalition. This tactic, PM Sanchez hopes, will be enough to keep a right\/far right coalition of the Partido Popular \/ Vox parties from happening. According to polls though, this is the most likely outcome, with the two parties taking 1st and 3rd place and collectively having enough seats to form a two-party majority. One interesting curveball though is the weather\u2026<\/span>Spain has been caught in the prolonged heatwave that most of Europe has been suffering and this won\u2019t fare well for a party that isn\u2019t a firm believer in climate change, such as Vox. Temperatures are set to drop by the weekend, so we don\u2019t necessarily see it impacting turnout, but it could influence the vote. From a wider European perspective, Spain going right wing could cause an issue for the establishment, particularly as Italy is already on that side of the spectrum and therefore the populist voice on the continent would grow louder. We\u2019ll have to wait and see\u2026<\/span><\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Food Inflation Eases<\/h2>\n <\/div>\n
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Following yesterday\u2019s comments from Ocado\u2019s CEO that the country is \u2018over the worst\u2019 of food price inflation, the ONS\u2019s food price index has further eased \u2013 though remaining close to record highs. Here the ONS stated that \u201cfood price inflation eased slightly this month, although it remains at very high levels\u201d. While the rate of food inflation shows signs of slowing down, it nonetheless remains historically high at 17.3% – just down from March\u2019s figure of 19.2% which represented the highest level in 45 years. The ONS\u2019 print follows Kantar\u2019s grocery price inflation index easing for a fourth consecutive month in July and brings hope that pressures may ease on household budgets as the cost of living continues to bite.<\/span><\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Low inflation levels, surprise Spanish elections, and easing of food inflation.<\/p>","protected":false},"author":15,"featured_media":2566,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-2557","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/2557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/comments?post=2557"}],"version-history":[{"count":12,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/2557\/revisions"}],"predecessor-version":[{"id":2866,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/2557\/revisions\/2866"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media\/2566"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media?parent=2557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=2557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=2557"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=2557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}