I’m diving into this whole inflation thing, and honestly, it feels like wandering through a maze blindfolded. So, apparently, the UK’s consumer price inflation hit 3.6% year-on-year in June. That’s up from 3.4% in May—wow, thrilling stats, right? It’s the highest since, what, January 2024? And, well, it might mess with those hopeful thoughts about the Bank of England slashing rates soon. Maybe. Or maybe not. Who can say?
### What Stood Out in the June CPI Report
First off, headline CPI is up—3.6% annually. Everyone guessed 3.4%, so, surprise! Monthly inflation jumped by 0.3%. I mean, why not?
Then, there’s Core CPI, you know, without the fun stuff like energy, food, alcohol, and tobacco. That’s at 3.7% now, up from 3.5%. Feels like those underlying price pressures are like that clingy ex.
CPIH, which includes things like mortgages—yeah, that’s up too, 4.1% from 4.0%. Way above the BoE’s chill 2% target.
Oh, and transport costs. Fuel seems to be adding lots to the mix, while housing costs did their little dance to keep things balanced-ish.
As for services, inflation is at 4.7%, holding strong. Meanwhile, goods inflation decided to jump from 2.0% to 2.4%—highest since last October. Spooky. Food went up too, from 4.4% to 4.5%. Three months in a row now. Guess someone forgot to hit pause.
These inflation bits are throwing the Bank of England a real puzzle. They’ve got to juggle taming price pressures while not smothering economic growth. It’s like deciding whether to wear a raincoat or shades because the weather can’t make up its mind. Rates might still be cut, but inflation trending up gives ammo to the cautious crowd.
Turns out the disinflation ride in the UK isn’t exactly smooth. Services inflation just won’t cool off. The big brains will be eyeing labor market data and other stuff to see if this inflation hike is a blip or a “Hey, we might have a problem here” moment.
### Market Jitteriness
Over to the markets. How’s the British pound doing against other major currencies? It’s been quite the dance. Okay, so there was a bit of strength post-inflation news. Traders thought, “Hey, BoE might not cut those rates too soon.” But the reaction sort of fizzled out as the morning wore on. It’s like when you hear a rumor and then, meh, back to business.
By the end of the day, the pound mostly leaned bullish, but hey, it’s still a mixed bag. Traders seem to be caught in that awkward “Do we brace for inflation or bet on economic growth concerns?” phase. BoE’s next meeting in August—who knows what surprise we’ll get then?
