British Inflation Figures in Focus Amid Global Price Pressures
London (Reuters) – British inflation figures will be closely watched on Wednesday as concerns about domestic and global price pressures and a weak economy put growing pressure on finance minister Rachel Reeves.
Economists polled by Reuters expect the annual rate of consumer price inflation to remain at 2.6% in December, above the 2.5% forecast by the Bank of England. The services inflation rate, viewed as a key measure of underlying price pressures, is expected to fall to 4.9% in December from 5.0% the month before.
The Bank of England had previously forecast inflation to increase slightly further in the near term, following higher than expected November inflation data. The BoE in November said measures in Reeves’ budget would likely add just under 0.5 percentage points to inflation at its peak between 2026 and 2027.
The rise in government borrowing costs, which have increased for seven consecutive sessions, is also causing concerns. 10-year gilt yields have risen to their highest since 2008, and analysts say the jump in government yields has put Reeves at risk of breaching the government’s new fiscal rules.
A survey showed two-thirds of British retailers plan to raise prices this year in response to higher employer social security costs, adding to households’ high living costs. The weak economy and global price pressures are also leading to concerns about stagflation in the UK.
