Stateside inflation roars to highest rate since Christmas 1981
Stateside inflation has roared to its steepest level since Christmas 1981 in a sign of darker times to come for UK households, reveals official figures released today.
Prices are 8.5 per cent higher than they were a year ago in the US, according to the US Bureau of Labor Statistics.
The damning figures strengthen the likelihood of the US Federal Reserve pushing through the quickest rate hike cycle in recent history.
Jerome Powell, chair of the world’s most influential central bank, last week said the Fed will hike interest rates 50 basis points more than once this year if inflationary pressures intensify.
Doing so would break a tradition of moving rates in 25 basis point increments and would illustrate the Fed’s intent on dousing down the record cost of living across the pond.
Soaring prices in America paint an ominous outlook for the UK, with the cost of living on these shores typically moving in line with the US.
New inflation British figures are released tomorrow and are expected to climb to 6.7 per cent, the highest rate since March 1992, driven higher by Russia’s war in Ukraine lifting food and energy prices.
Figures that high will dial up pressure on the Bank of England to look through weakening growth and zero in on taming the worsening cost of living.
The Bank has already lifted rates at its last three meetings and some experts think they will push ahead with four more hikes, which would mark the quickest calendar year tightening cycle since 1988.
Households are bracing to be stretched by the steepest fall in their living standards in 66 years, caused by an annual inflation rate of 7.4 per cent cancelling out gains from pay rises.
Figures published by the Office for National Statistics today reveal Brits’ spending power is falling, reinforcing forecasts that consumer spending will drop this year, weighing on economic growth.
Wall Street bounced on the inflation figures driven by investors betting this will be the peak of price rises in the US.
The tech-heavy Nasdaq, which is sensitive to changes in inflation as they typically drive investors’ predictions on where interest rates are headed, climbed 1.88 per cent.
The S&P 500 rose 1.2 per cent.
“This report is encouraging, at the margin, though it is far too soon to be sure that the next few core prints will be as low,” Ian Shepherdson, chief US economist at Pantheon Macroeconomics, said, adding he thinks the Fed will hike rates 50 basis points at its next meeting on 4 May.