Over the weekend, British Finance Minister Jeremy Hunt suggested that inflation is on track to halve by the end of 2023. Hunt vowed to focus on this as the priority goal for H2 of 2023. On Friday, British data released by the finance department showed that the UK economy had recovered faster than previously predicted.
Inflation spikes haunt U.K and eurozone in September
In the U.S., however, initial data for the Federal Reserve showed a 3.8% spike in unemployment, with 110,000 fewer jobs created in August in comparison to June and July, despite the U.S. boasting increased job growth and market economy.
Alongside Hunt’s announcement, the inflation rate in the eurozone remained at a steady 5.3% average for August, with energy inflation seeing a resurgence due to rising fuel prices. Similarly, the rate of rising inflation shows that the underlying factors for a constant increase have not been tackled – namely, fuel prices, lack of job opportunities and interest hikes.
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Additionally, the Bank of England (BoE) also considers headline inflation and underlying inflation inextricably linked. Speaking at a conference hosted by the South African Reserve Bank in Cape Town, Chief Economist for BoE Huw Pill stated:
We are yet to see the downturn in core inflation, the downturn in services price inflation that we need to see, to be reassured that we’re going to get back to target in a timely manner.
Pill indicated that the BoE should be cautious of its own persistent intervention surrounding inflation. Since December 2021, the BoE has raised rates 14 times, with a predicted peak of 5.75% by the close of 2023.
