United Kingdom junior Brexit minister Baker says does not see Brexit strategy changing

Share

This month's decision comes in the wake of official figures showing inflation hit 2.9% in May - its highest level in almost four years and far higher than expected.

"This spike in inflation will exert further downward pressure on real household disposable income, at a time when wage growth remains modest, and in turn squeeze consumer spending".

The ONS figures come just a day after data showed that consumer spending in the United Kingdom fell for the first time in nearly four years last month, signalling shoppers are growing more cautious and adding to fears that the economy there is cooling.

Policymakers are expected to unanimously decide to hold the interest rate at a record low 0.25% and the quantitative easing at GBP 435 billion.

In nominal terms, wages grew at the slowest pace since February 2016, rising an annual 2.1 percent in the three months to April and slowing from 2.3 percent in the first quarter.

The next clue to the deep discontent of the nation will come on Wednesday when government statisticians release the latest earnings figures.

Prime Minister Theresa May is still in talks with Northern Ireland's Democratic Unionist Party (DUP) to form a minority government with her Conservative Party, less than a week before the formal start of Britain's negotiations on leaving the European Union.

The Office for National Statistics said Tuesday that consumer prices were up 2.9 percent on the year in May, from 2.7 percent in April.

Economists taking part in a Reuters poll had expected wage growth of 2.4 percent.

Britain's economy has been resilient to political uncertainty since last June's Brexit vote.

The wage numbers jarred with the picture of strong jobs growth but appeared consistent with signs of rising underemployment, Tombs said. It expects wages to rise by 2 percent this year before picking up in 2018 and 2019. Excluding bonuses, salary increases carried expectations for 2% after 2.1%.

The minutes of the MPC's rates meeting will be watched closely for the Bank's latest thinking on prospects for inflation and the pound following the shock election result last week.

Share