Bloomberg details:
The British economy grew at the fastest pace in four years in the second quarter and German business confidence surged to a three-year high this month, indicating Europe’s recovery may be stronger than forecast.
U.K. gross domestic product rose 1.1 percent in the three months through June, almost twice as fast as the 0.6 percent gain predicted by economists in a Bloomberg News survey, the Office for National Statistics said in London today.
My take? The issue will be containing this run up in inflation, but it is an easier task dealing with moderate (for now) inflation than disinflation / deflation.
Market Oracle details:
UK Inflation has yet again hit a new high of CPI 3.7% up from last months inflation peak of 3.4%, with RPI rocketing even higher to an eye watering 5.3%, a level not seen since 1991. The academic economists were again taken by surprise. The Bank of England's failure in its primary duty of targeting inflation has prompted the Governor Mervyn King to write another letter to this time the new Chancellor George Osbourne that will again state for the fifth time this year that the rise in inflation above 3% was temporary and not to worry, it should come down, eventually (fingers crossed).
The concern is that it appears the upward trend in prices is widespread (i.e. not just an energy phenomenon per the U.S.).
The largest upward pressures to the change in the CPI annual rate between March and April came from:
- Clothing and footwear where prices, overall, rose by 2.2 per between March and April this year but rose by only 0.2 per cent a year ago; this was mainly due to garments and, in particular, women’s clothing.
- Food and non-alcoholic beverages, mainly due to the food component where upward effects were widespread rather than from one particular food group. Reports have suggested that the closure of European airspace as a result of the Icelandic volcano had a limited impact on food prices in April.
- Alcoholic beverages and tobacco where prices, overall, rose by 2.1 per cent between March and April this year (driven by the increases in excise duty that came into force towards the end of March) but were unchanged a year ago.
Darn volcanos!
Source: Stats.Gov.UK
Bloomberg reports:
U.K. inflation slowed more than economists forecast in April to the weakest level in 15 months as the recession undermined price pressures in the economy.
Consumer prices rose 2.3 percent from a year earlier, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 28 economists was 2.4 percent. The retail price index measure of inflation dropped an annual 1.2 percent, the most since records began in 1948.
A preview of what we're likely to see here (U.S.) tomorrow morning...
Please note the different time series used below (input data only available from 1992 onward).
