UK shop price inflation jumps to fastest pace since February 2024..
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| Food inflation in the UK accelerated this month to 3.9%, being led by meat, fish and fruit. Shop price inflation has increased by 1.5% YoY and jumps up much higher than December's 0.7% figure.
The findings highlight a real struggle for consumers and for the BoE to not get complacent and think inflation is fully under control yet. This is supportive for the Pound as it means it will limit the bank's opportunity to lower interest rates (higher interest rate, a higher currency).
Talking of a higher currency and both Barclays & JP Morgan are predicting a stable, but higher rate for GBP v EUR this year.
An average of £-€1.17 for Barclays and £-€1.16 for JP Morgan sees them aligned overall, but by following very different paths. Barclays expect H2 to be stronger for the pair with JP Morgan expecting a much stronger H1.
These two are right at the top of the forecasts we are seeing from investment banks, so something worth considering.
They do diverge on GBP v USD (which is very typical because of its volatility) with Barclays at an average of £-$1.33 and JP Morgan at £-$1.38.
Elsewhere, the EU & India have finalized a landmark trade deal today as both sides seek to hedge against the US and Prime Minister Keir Starmer is set to become the first PM to visit China since 2018 this week.
UK-China & EU-India have very similar bilateral trade numbers (around £100bn), but these are now expected to grow substantially as everyone looks to diversify away from the unpredictable Trump. |
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