13 April 2022
If you are covering the latest UK inflation data, please find below a comment from Paul Craig, portfolio manager at Quilter Investors:
“UK inflation continues its march upwards and it has now topped 7% in March, continuing to remain at levels not seen for 30 years. Unsurprisingly, the biggest contributions continue to come from soaring energy, fuel and food prices, among others, and worryingly for consumers and policy makers, nothing is offsetting it.
“Last month’s Spring Statement did little to quell the fears of those already feeling the squeeze financially, and the introduction of the new energy price cap and the national insurance increase has further increased the pressure. With wages failing to keep up and pensions not rising by a similar amount, things are going to get tough for a lot of consumers.
“Alongside the Bank of England’s most recent interest rate hike came the prediction that inflation would hit 8% later this spring. The Bank has underestimated the extent of inflation in previous forecasts and given this month’s increase, there could be even worse to come than previously feared.
“The Bank of England is looking more and more as if it is on the back foot in this fight against inflation. While trying to remain coordinated with other central banks, it appears they may have been too late in tightening monetary policy conditions and subsequently inflation has spiralled out of control. With the delicate market environment owed to both rising inflation, the uncertainty surrounding Russia’s war on Ukraine and now severe lockdowns in China, we could easily see inflation rise above the BoE’s forecasts. Investors will need to continue to watch the data and markets closely and allocate accordingly. Diversification, active management and prudency remain key.”
