UK growth may be more of a worry than inflation

Business News
Spread the love

People walk along Camden High Street in London, Britain, September 19, 2020. REUTERS/Henry Nicholls

LONDON, Sept 15 (Reuters Breakingviews) – British inflation leapt to 3.2% in August from 2% the previous month, the sharpest increase in the annual rate on record, data showed on Wednesday. As in the United States, pandemic-related distortions are muddying the waters. The UK government subsidised eating out a year ago and the hospitality sector got a temporary reduction in value-added tax. The question for the Bank of England, as for the Federal Reserve , is whether high inflation persists.

Supply chain disruptions have boosted prices of goods on both sides of the Atlantic. And some sectors are struggling to recruit staff , pushing up wages. Brexit is accentuating these problems. Yet inflation may prove less of a problem for the UK central bank. Prime Minister Boris Johnson is raising taxes on workers next year to pay for health and social care read more , which will leave households with less disposable income. The corollary of reduced price pressures may unfortunately be lower UK growth. (By Swaha Pattanaik)

On Twitter

Capital Calls – More concise insights on global finance:

Darktrace emits travelling salesman omens read more

Yum China fries up bucket of consumption woes read more

Amazon pay rise shows changing inflation dynamics read more

De Longhi’s share sale calls peak coffee read more

German property mega-deal goes from bad to worse read more

Editing by Ed Cropley and Oliver Taslic

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.

Source link

Leave a Reply