What the UK's lingering inflation problem could mean for clients

Energy no longer in calculation

Today, we learned that UK inflation has fallen sharply. But do not be misled by the headline numbers.

 The outlook for underlying inflationary pressures - what economists and central bankers call ‘core' inflation - remains too strong for comfort. So much so, that we now think the Bank of England's main policy interest rate could rise to as high as 5% and stay there for the rest of the year - if not longer. UK inflation drops to 8.7% in April One reason why UK inflation has remained high relative to other developed countries is due to the distinctive way British retail gas and electricity prices are set, with semi-annual price cap adjustments through the UK's Energy Price Guarantee ...