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PwC comment on ONS CPI June figures

20 Jul 2022

Barret Kupelian, senior economist at PwC, says:

“UK consumer price inflation edged slightly higher to 9.4% in June helped mainly by high fuel and food prices and a weaker sterling. The restaurant and hotels sectors also contributed significantly to higher inflation, fuelled both by high labour costs-- with relative vacancies in that specific sector the highest in the country-- and higher cost inflation on inputs specific to that sector, including food.

Compared to other peer economies-- France, Italy, Germany or the US-- the UK now records the highest rate of harmonised inflation. In the next few months, we expect a further increase in UK CPI, mainly driven by the uplift in the energy price cap which we estimate will exceed 50%. Some of this impact could potentially be offset depending on the size and scope of future government support. 

“Today’s CPI release will add to existing pressure for the Bank of England’s Monetary Policy Committee to act more decisively, perhaps by increasing its headline policy rate by 50 basis points in its next meeting in August, as hinted by the Governor yesterday. 

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David Bowden

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