Inflation figures out this morning make for grim reading: the headline rate didn’t budge, sticking at 8.7 per cent on the year in May. Far worse, core inflation (which excludes food and energy) rose once again, to 7.1 per cent on the year in May, up from 6.8 per cent in April.
This latest update from the Office for National Statistics carries far more weight than your usual monthly report. With mortgage costs spiralling into a crisis, the Bank of England will have been looking for any excuse to stick to a dovish interest rate hike or to even hold rates, as the Federal Reserve did last week for the first time since 2022. But it’s hard to see how they can opt for such a cautious strategy now.
What is troubling is that the inflation figures defy the consensus that the rate would fall at least marginally in May (the Bank had estimated a fall to 8.3
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