LONDON (Reuters) – British inflation unexpectedly jumped above the Bank of England’s 2.0% target in May when it hit 2.1% and appears to continue to rise as the country reopens its economy following the coronavirus lockdown. .
The increase in price growth from the 1.5% in April was due in large part to the comparison with prices in May 2020, when the country was in its first strict shutdown, especially for clothing, motor fuel , games and food to go.
A Reuters poll of economists had pointed to a rise in inflation to 1.8%.
Investors around the world are evaluating the risks of a sustained rise in inflation, especially in the United States, where annual inflation reached 5.0% in May, the highest in almost 13 years, and where US President Joe Biden proposed a $ 6 trillion stimulus package. .
Jack Leslie, an economist at the Resolution Foundation think tank, said that accelerating price growth from 0.3% in November to 2.1% in May represented the fastest rise in six months since the British pound collapsed after the fall. 2008-09 financial crisis.
“But UK inflationary pressures are different, and nowhere near as great, as those causing fierce debate in America,” Leslie said.
The ONS figures changed little to the British pound.
The Bank of England has said it expects inflation to hit 2.5% by the end of this year as the economy reopens after the coronavirus lockdowns and as world oil prices rise.
Core inflation, which excludes the price of food, energy and other volatile items, rose to 2.0% in the 12 months through May, the National Statistics Office said.
Governor Andrew Bailey and most of his colleagues say the rise in inflation will be temporary and does not require the central bank to reduce its massive stimulus programs. It is expected to leave the policy unchanged on June 24 after its last meeting.
But chief economist Andy Haldane said last week that Bank of England policymakers faced the “most dangerous moment” since 1992, when the government removed the British pound from the European Exchange Rate Mechanism, a forerunner of the European Exchange Rate Mechanism. euro.
There were signs of increased price pressure in Wednesday’s data.
Prices paid by manufacturers for their inputs increased 10.7% in the 12 months to May, the highest since September 2011, and the prices they charged increased 4.6%, the largest increase since January 2012.
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