Data on Tuesday recently showed that consumer prices in the United Kingdom have been rising at its fastest rate in the past three years as more and more Britons continued to face tight living standards in the eve of the country’s separation from the European Union and the looming general elections.
In April, the United Kingdom’s annual inflation rate was at around 2.7% higher than the previous month’s 2.3% according to data from the Office for National Statistics which was the fastest inflation rate seen since September 2013 but was in accordance to Wall Street analysts forecasts where consumer prices have risen 0.5% beating most market estimates.
As the country further moved into the British exit process which has been started by Prime Minister Theresa May last March, a general election will be held this coming June 8 which would elect one parliament member to the House of Commons.
A snap election was called by Prime Minister Theresa May last month to strengthen her claim in the negotiations of the British exit from the European Union despite ongoing and rising concerns regarding the country’s living standards becoming an issue in her campaign. May’s party then included campaigns and promises to place a cap
The rise in inflation rates was believed to have been driven up mostly by the rising airfare prices due to the number of holidays in the past months. This is on top of rising clothing, car tax, and electricity prices that affected overall consumer prices.
The markets are currently projecting a higher inflation ahead although analysts and economists commented that the market is currently underestimating the already high inflation rate which would go on in the near future.
Wages and Unemployment
General election polls are currently in favor of May which might change as British worker wages are currently going up at a slow rate and would slow down the British economy as the country depends heavily on domestic demand.
On Tuesday, the Labour Party announced their aim of pledging a higher minimum wage and the potential involvement of the state in keeping prices in the energy sector down.
Just recently, Bank of England Governor Mark Carney warned on how wage growth would be surpassed by inflation as the year 2017 is currently proving to be a challenge for British consumers.
Trades Union Congress General Secretary Frances O’ Grady, on the other hand, stated that Britain could not afford another real wage slump as rising prices continue to hammer pay packets.
An unemployment report is set to be released later in the day where the markets would be assessing the impact of the Brexit to the country so far.