Inflation in Great Britain is breaking new records

The United Kingdom and the United States are two countries where interest rates may rise at a similar pace, according to the valuation of the interest rate market.

Bank of England has already almost raised the main interest rate by 50 basis points due to that the annual rate of inflation in the United Kingdom increased in January this year. to 5,5%, which is the highest reading since March 1992. In December 2021, inflation was 5,4%.

The forecasts do not show an imminent end of inflation

The following prices contributed most to inflation: gas (28,3 percent), electricity (19,2 percent), housing and communal services (7,1%). It was also more expensive food (4,3%) or clothing and footwear (6,3%). On the other hand, there was a slowdown in transport costs (from 11,9% to 11,3%). In monthly terms, consumer prices fell by 0,1 percent, which is the first decline in a year, with forecasts for a decline of 0,2 percent.

The outlook for a rapid decline in inflation in the UK does not seem to be the best. Further data may suggest that producer prices in January 2022 increased by 9,9%, which would be the largest increase since September 2008. This may translate into prices in stores in the near future, further boosting consumer inflation and increasing potential actions of the Bank of England, which may have a positive effect on the British pound. On a monthly basis, UK producer prices seemed to rise by 1,2%, which meant an acceleration of inflation from 0,3%. in December and breaking the market consensus, where an increase of 0,6 percent was estimated.

USA: how to lower fuel and food prices?

In the United States, politicians are working to lower food and fuel prices. This may take place, for example, by reducing taxes, which in turn may affect the valuation of the pace of interest rate increases in the US and the interesting rivalry between GBP and USD.

Today at 20, the minutes of the last meeting will be published Federal Reserve, where the market can look for hints on what the Fed will want to do at its next meeting - March 16.