BCC Warns of Inflation Remaining Above Target Until 2027

Thought for Thursday, warning of UK inflation rising and staying above targets, costs of coffee, and disinformation in the US.

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Thought for Thursday

“Very often you learn that the most important lessons in school are not learned during the lessons, they are learned during the breaks.” – Yuval Noah Harari

BCC Warns of Inflation Remaining Above Target Until 2027

The British Chambers of Commerce has warned that inflation could rise and continue to stay above the Bank of England’s 2% target rate until 2027. According to their latest forecasts, the BCC indicated that inflation would increase to 2.6% by the end of 2024 and stay above the 2% target until early 2027.

The group cited persistently high energy prices and wage growth as key drivers behind inflation over the coming years. Such conditions, it said, would require the Bank of England to cut only incrementally.

The BCC’s forecasts differ from those of the Bank of England, which saw inflation easing to 1.9% by May 2026 and 1.6% by May 2027, according to their latest Monetary Policy Report.

With the Bank of England conducting their first cut in four years on 1st August, money markets are now pricing in around a 21% chance of a further 25bps cut on 19 September.

Since their last policy meeting, while CPI came in marginally below forecasts, it nonetheless rose 20bps from June’s figure of 2%.

When considering how service price inflation still stands at 5.2%, and UK wage growth far surpassed expectations on 13 August (5.4% vs 4.6%), these figures further indicate that the BoE is not out of the woods yet in their fight against inflation, raising the possibility of rates being held higher for longer.

Coffee Costing a Pretty Penny

Research conducted by McDonald’s has indicated that the average coffee drinker spends over £29,000 on takeaway coffee over the course of their lifetime. The study of 2,000 people also suggests that Millennials spend over £700 a year on takeaway coffee, more than any other generation, above that of Gen Z (at £676 per year) and Baby Boomers (at £260 per year).

The research also suggested that though 35% of workplaces offer free instant coffee, 37% of people would prefer to spend money on a ‘nice’ cup of coffee outside the office.

This comes despite research finding that Brits consider that a cup of coffee should cost £1.86, significantly less than the average cup on the high street.

Separately, in the UK, Brits drink around 95 million cups of coffee a day, with this figure having grown by 25 million cups since 2008. The UK, however, does not even make it into the top 10 when it comes to average coffee consumption.

According to Statista, Finland consumes the world’s most coffee per capita at 12kg per person per year. It perhaps comes as no surprise, given that Finnish law allows for workers to be provided with two coffee breaks per day. Finland is followed by Luxembourg (11.1 kg pppa), the Netherlands (8.2 kg pppa), and Sweden (7.7 kg pppa).

Disinformation

Another election, another disinformation story… Yesterday, the US Justice Department announced the seizure of 32 web domains they say Russia has used to influence November’s presidential election.

The tactic of the sites was to appear to mimic existing US media outlets, with domain names that closely resembled those of the legitimate outlet but with vastly different stories – this example of one imitating the Washington Post gives a great illustration.

Additionally, the Justice Department also charged two employees of the Russian state media outlet RT with violating the Foreign Agents Registration Act.

This is some of the strongest action taken by the current administration to reduce disinformation. The general theme is that Russia is more supportive of Trump becoming the next president.

The Hill has the full story.