Inflation worries mount in the UK
With the economy already seeing the reopening demand moderate and supply bottlenecks as well as labour shortages weighing, inflation worries are adding to concerns of a further slowdown towards the year-end.
This definitely creates a bit of a “toxic” situation for the BOE as they will have to deal with rising inflation while having to balance an economic slowdown, which could only get worse in the months ahead amid the energy crisis.
BofA’s UK consumer confidence indicator has fallen to its lowest since February on a 7-day moving average with the firm noting that:
“Inflation expectations surged 60 bps from August, with over 30% of respondents now expecting inflation above 5% in five years’ time.”
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