According to research firm Kantar, UK food prices rose 14.7% in the past four weeks in October. It was the largest increase since statistics began. For the average household, it is estimated to cost an additional £682 a year. The number of households who answered that they are in financial difficulty has increased to 27%. It has doubled since November last year. There are no signs of food prices peaking out.
In today’s speech, Bank of England chief economist Pill expressed his recognition that the economy must slow down in order to lower the inflation rate, and that interest rates must be raised in order to tighten monetary policy. However, he was skeptical of early rate hikes.
I thought the GBP would be more likely to buy if the interest rate was raised aggressively, but so far there has been little reaction.