The latest market update from our Wealth Management team, in conjunction with our research partner, Square Mile is here.
The latest annual CPI inflation rate in the UK is the highest since 1982, standing at 9.1% and up from 2.1% a year ago. Although the Bank of England now expects inflation to reach 11% later this year, we are confident that it will fall back in 2023.
However, it is unknown where inflation will settle. With unemployment rates back to pre-COVID levels, there is evidence that inflation is now spreading to wage demands and the risk of a wage price inflation spiral becoming embedded cannot be ignored.
Central banks are pursuing very different strategies in their efforts to control inflation. The US Federal Reserve is raising interest rates aggressively, but the Bank of England is taking a softer approach. Despite inflation raging at 8.6% in the eurozone, the European Central Bank is yet to begin.
Rising interest rates and the cost-of-living squeeze are taking their toll on economic growth. A slowdown is already underway and there are fears that this could evolve into outright recession.
Read the full update below: