Inflation Shocker in The UK: Core CPI Spikes to 30-Year High, Driven by Spike in Services, Even as Motor Fuel Prices Plunge
The comments below are an edited and abridged synopsis of an article by Wolf Richter
Bond yields jump as they begin to price in more Bank of England rate hikes, and higher for longer than previously imagined.
Inflation is infamous for its head-fakes, and it can dish out one nasty surprise after another—at least for observers who keep expecting that inflation will somehow go down on its own. Recently (June 21), an inflation shocker occurred in the UK. This is a warning for all economies: Inflation is solidly entrenched in services and is getting even worse.
Core CPI spiked month-to-month by a scary 0.8% in May, which translates into an annualized spike of 10%, according to data from the UK Office of National Statistics.
Year-over-year, core CPI spiked by 7.1%, the worst since March 1992. Core CPI excludes energy, food, alcohol and tobacco. Left in the dust are the false-hope declines that started in November.
Richter discusses spikes in services CPI; food inflation; motor fuel inflation; overall CPI; and the UK 1-year government bond yield.