The media are full of news about UK mortgage rates going higher. But when we get to the cost of living and inflation they ignore its impact over the past year.
CPI 0%
CPIH 0%
RPI 55.1%Give the RPI the credit for telling the real story.https://t.co/7Dm3FbbX7I
— Shaun Richards (@notayesmansecon) June 21, 2023
That is an absolutely disastrous core CPI print for Britain…
The Bank Of England is well and truly the cautionary tale for this inflation cycle. https://t.co/WJss0XvSXX pic.twitter.com/LCysf8sxSo
— Tarric Brooker aka Avid Commentator 🇦🇺 (@AvidCommentator) June 21, 2023
NEW – UK's debt mountain is bigger than the whole economy for the first time since 1961, grim figures showed today.https://t.co/5JmM9cT8jq
— Disclose.tv (@disclosetv) June 21, 2023
The May inflation numbers post a warning for the UK economy
As 2023 has progressed we have got used to the news on the UK economy being better than expected. Of course that was partly because places like the Bank of England chose to wrap themselves in a coat of doom and gloom. But we have so far navigated stormy seas and made a little if not much progress. This morning has brought more of a troubling theme from inflation.
The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to May 2023, unchanged from April.
On a monthly basis, CPI rose by 0.7% in May 2023, compared with a rise of 0.7% in May 2022.
The headline issue is that the inflation rate was unchanged in May. But the particular concern for me was the way that the UK decoupled from trends amongst what we consider to be peers.
Harmonized Index of Consumer Prices, May 2023
+6.3% on the same month last year (provisional result confirmed)
-0.2% on the previous month (provisional result confirmed)
Those are the May numbers for Germany and the issue here is that in May we had a much more inflationary pattern. Or if you prefer some 0.9% higher. Until now our patterns had been similar if one allows for the fact that the UK will see a drop in the price of domestic energy in the July figures. There are slightly different numbers for France but the theme is the same.
The harmonized consumer price index (HICP) fell by 0.1% in May 2023 over one month, after +0.7% the previous month; over one year, it increased by 6.0%, after +6.9% in April.