Persistent UK Inflation Should Worry Everyone

There was nothing but worrisome news in Wednesday’s economic data releases for the UK. And the implications extend beyond Britain in a multifaceted way.

The latest economic data shows that:

  • Core inflation for May rose to 7.1%, from 6.8% in April. This exceeded the consensus forecast and constitutes the highest reading since 1992.
  • Headline inflation remained stuck at 8.7%, among the highest levels in the G-20, as the drivers of consumer-price increases continued to migrate to the more stubborn components including services.
  • The doubling of monthly government net borrowing pushed debt-to-GDP to 100% for the first time since 1991.
Faster Than Expected | Both UK consumer prices and core inflation excluding energy and food costs exceeded economists' forecasts for the past four months