Consumer prices in Britain rose more than forecast in March, with inflation remaining above 10 per cent, strengthening the conviction for a quarter point interest rate hike at the next Bank of England monetary policy meeting in May.
The consumer price index, a closely watched measure of inflation in the UK, rose by an annual 10.1 per cent in March, according to a report published by the Office for National Statistics on Wednesday.
The March inflation rate was above economists’ expectations of 9.8 per cent and follows an unexpected jump to 10.4 per cent in February, which broke a three-month series of declines since October’s 41-year high of 11.1 per cent.
The smaller than expected drop in inflation comes on the heels of a fall in global oil prices over recent months which was offset by accelerating prices of food and non-alcoholic drinks, which rose by 19.1 per cent in the year to March.
Meanwhile, the US economy slowed in recent weeks, as hiring and inflation slowed down whilst access to credit narrowed, according to a Federal Reserve survey of regional business contacts known as the Beige Book.
Moreover, the failure of California-based Silicon Valley Bank put more stress on the US financial system, with potential far-reaching repercussions. The Fed stated that bank lending and demand for loans among both consumers and businesses “generally declined”.
On the other hand, conditions in the jobs market showed improvement. Fewer businesses reported heavy layoffs and more businesses stated it has become easier to find workers, with employee retention improving.
That coincides with government figures showing that the US labour market has lost some momentum recently, though still remains strong.
Finally, China’s economy rebounded faster than expected in the first quarter of this calendar year, surpassing growth estimates, after the country relaxed its stringent pandemic restrictions whilst consumer spending soared.
Compared to the first quarter in 2022, gross domestic product (GDP) grew by 4.5 per cent, according to official figures. Economic activity was underpinned by a surge in household spending along with a rise in factory activity.
For the past two decades, China has been the single largest contributor to world growth. Despite simmering tensions with the US, and growing disagreements with Europe, the Western bloc remains highly dependent on China at an uneasy time.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).