Commenting on this morning’s latest ONS figures on inflation, Melanie Baker, senior economist at Royal London Asset Management said:
"There was again little here to reassure the Bank of England – inflation remains well above target, core inflation is well above 2% and services inflation has risen quickly over the past year. Some measures of inflation expectations look elevated and the labour market still looks tight.
"It is unlikely that we’ve seen the last rate rise this year. By raising interest rates, the Bank can cool demand to bring it down in line with supply. By acting and sounding serious about tackling high inflation, they can help lower inflation expectations. However, the Bank still aren’t sending as strong a message as they could with the last set of minutes sending an ambiguous message on their interest rate outlook.
"In the meantime, these high rates of inflation continue to run faster than pay growth and the financial situation of many households will be worsening. High inflation, especially on essentials like food and energy, combined with the central bank rate hikes means the outlook for the consumer remains challenging. Consumer confidence and May retail sales data are out on Friday and are both expected to be weak."
About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £164 billion of assets and employs 129 investment professionals as at 31 December 2021. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.
For press releases about RLAM please click here.