Status: 09/14/2022 11:04 a.m
Currency devaluation in the UK has eased slightly after the recent record. In August, the inflation rate surprisingly fell below ten percent again. Fuel prices provided some relief.
Inflation in the UK surprisingly fell in August. Consumer prices were 9.9 percent higher than in the same month last year, according to the statistics office ONS. In July, inflation was still 10.1 percent year-on-year. Economists polled by Reuters had expected a further increase to 10.2 percent in August. The statistics office ONS explained the somewhat lower inflation rate primarily with cheaper prices for petrol and diesel. Food, on the other hand, would have caused inflation to remain high.
The data takes some pressure off the Bank of England, which is struggling with the highest inflation of any major developed country. The central bank kept raising interest rates in order to counter the rise in prices. Due to the mourning period following the death of Queen Elizabeth II, tomorrow’s interest rate meeting has been postponed to September 22nd. Many experts believe that a 0.5 percentage point increase in the key interest rate is likely. It is currently 1.75 percent.
The new British Prime Minister Liz Truss recently presented a multi-billion dollar plan to deal with the energy crisis. The government expects that this will noticeably lower inflation.
ECB under strong pressure to act
High inflation rates are also keeping the euro area in suspense. Last week, the European Central Bank (ECB) decided on the largest interest rate increase since the introduction of euro cash: monetary authorities raised the key interest rate in the euro area by 0.75 percentage points to 1.25 percent. Further steps by the ECB are expected in the coming months.
USA ahead of further interest rate hikes
In the United States, too, there are signs of further significant interest rate hikes. According to the “Fed Watch Tool”, a good third of market participants even expect interest rates to be raised by a full point to a range of 3.25 to 3.50 percent for the US Federal Reserve’s interest rate meeting next week. The peak of the wave of interest rate hikes in the USA is currently not expected until next year in the range of 4.25 to 4.50 percent.