The latest Ulster Bank Northern Ireland PMI is out today. It indicates that solid growth of new orders fed through to a further increase in business activity in July. There were reports of success in securing new work from the Republic of Ireland amid sterling weakness, helping to boost total new business. Job creation was sustained, albeit at a more moderate pace, while inflationary pressures continued to ease.
Does June’s unexpected fall in the rate of inflation herald the start of a retreat? It seems unlikely. The fall in sterling that has helped push inflation higher is still filtering through into consumer prices. And even at the lower rate inflation remains uncomfortably above wage growth. That’s a considerable headwind for the economy.
Using the UK consumer price index (CPI), the annual rise in the price of consumer goods and services eased from 2.9% in May to 2.6% in June. This unexpected easing marked the first fall in the annual inflation rate since October 2016 and perhaps reduces the likelihood that more members of the MPC will vote for an interest rate hike in the near future. That has been how financial markets have interpreted this morning’s figures, with sterling losing around one cent against the euro and the US dollar immediately after the inflation release.
While the media headlines continue to focus on the ongoing political turbulence, today’s inflation figures signal that the headwinds facing the consumer are intensifying. Continue reading
UK retail sales fell in the first three months of the year, the first quarterly fall since 2013. With rising prices squeezing their incomes, it looks as if consumers have decided to tighten their belts. Continue reading
Today we release the annual Ulster Bank Ulster Fry Index. It shows that the price of items making up a cooked breakfast have increased by 2.8 percent in the last 12 months, based on the Consumer Prices Index (CPI). Continue reading
The annual rate of UK CPI inflation remained unchanged in March at 2.3%. However, this headline conceals different trends within goods and services. Continue reading
Today sees the release of March data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by Markit – indicated that a solid rise in business activity ended a positive first quarter of the year. Further increases were also seen in new orders and employment. Meanwhile, rates of inflation remained elevated as a result of sterling weakness. Continue reading
We’re still well off letter-writing territory, but inflation saw a significant jump from 1.8% year-on-year in January to 2.3% last month. This is the highest rate of inflation since September 2013 and marks the arrival of the consumer price rises that the Ulster Bank NI PMI has been flagging for some months. The main driver is the acceleration in the price of consumer goods – everything from new cars to newspapers – where inflation was virtually non-existent just four months ago. Continue reading
Cost of living crisis
During the post-recessionary period from 2010-2013 inflationary alarm bells were ringing loudly in UK consumers’ ears. The lack of pay rises during this period exacerbated the squeeze on disposable incomes and gave rise to the so-called “cost of living crisis”. During this four-year period UK CPI averaged 3.3% per annum. Meanwhile the average per annum price increases for food, energy bills and motor fuels were 3.8%, 5.7% and 8.2% respectively. Continue reading