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With UK inflation at the highest level in 40 years and set to hit the 10% mark later this year, households are seeing an acute squeeze on spending power. On Friday, the polling group GfK reported that their measure of UK consumer confidence had dropped to the lowest level since the series started in 1974.
High inflation is hitting lower-income households the hardest. Lower-income households spend a higher share of their incomes on energy and food, whose prices are rising rapidly. The Institute for Fiscal Studies estimates that headline inflation of 9% translates into an effective rate of 11% for the bottom 10% of earners and an inflation rate of around 8% for the top 10%. Indeed, higher-income earners are better placed on all counts – with lower inflation, faster growth in pay, higher levels of saving and lower levels of unemployment than lower-income consumers. Averages conceal these vital distributional effects.
Energy costs, supply disruptions and the war in Ukraine are weighing on global growth. Among major industrial nations Germany has been hardest hit. Its manufacturing and export-focussed economy has generated ever-larger trade surpluses for each of the last 20 years. Now this model is being tested by spiralling commodity prices and slowing global demand. Forecasts for German GDP growth this year have fallen faster in the last six months than forecasts for activity in the rest of the EU and North America.
Climate change is a vast and complex subject. This week’s Briefing offers seven numbers that illustrate some of the challenges.
When the latest UK official data are published in two weeks’ time it is quite likely that they will show that inflation hit 9.0% in April, the highest level in almost 40 years. The speed and force of the upturn in inflation has been remarkable; just over a year ago UK inflation was running at under 1.0%.
Join me, and my guest, Deloitte CEO Richard Houston, for our spring economic webinar tomorrow, Tuesday, 26 April, at 13:00 BST where we will assess the economic outlook and discuss how business can navigate the challenges ahead.
Join me, and my guest, Deloitte CEO Richard Houston, for our spring economic update webinar on Tuesday, 26 April, at 13:00 BST where we will assess the economic outlook and discuss how business can navigate the challenges ahead.
Wild swings in supply and demand during the pandemic put global supply chains under enormous pressure. By the end of last year it looked as if supply chain disruptions would start to ease in 2022. Slowing pent-up demand and increasing production pointed to a gradual return to something closer to normal. Such hopes have been dashed in the last two months by rising COVID cases in China and Russia’s invasion of Ukraine.
The Ukraine crisis: Weekly analysis
Please join me this Thursday when I will be discussing with David Strachan, head of our Centre for Regulatory Strategy, the risks posed by the war in Ukraine to the financial sector and to financial stability.
The Ukraine Crisis: Weekly analysis
Please join me, my colleagues James Dillon and Peter Gooch this Thursday for a 30-minute discussion on the economic effects of the war in Ukraine, financial sanctions and cyber risk
The Ukraine crisis: Weekly analysis
Please join me for the second webinar of the series examining the effects of intense volatility in energy and wider commodity markets on corporates and the economy, with Andrew Barroso, our energy sector specialist and John Raven, macro modelling expert.