Bank of England faces mounting pressure as shocking price surge slows down Britain

The Bank of England will face pressure to increase interest rates at a faster pace after new data revealed that Britain is falling behind other G7 countries in the battle against inflation.

It is expected that rates will rise for the 13th consecutive time, reaching 4.75%, when the Bank’s Monetary Policy Committee announces its decision at midday.

However, yesterday’s inflation data from the Office for National Statistics (ONS) revealed that inflation remains stuck at 8.7%, prompting uncertainty about the magnitude of the increase.

Financial markets are currently divided, with a 51% chance of rates increasing by a quarter of a percentage point to 4.75%, and a 49% chance of rates reaching 5%.

Experts predict further increases in rates, potentially up to 6% by the end of the year, which could lead to a recession.

The May inflation figure was disappointing for the Bank of England, as inflation remains significantly higher than their 2% target despite a decrease from the peak of 11.1% in October. Even when excluding volatile factors such as energy and food, core inflation increased to 7.1% in May.

In comparison to other large economies, the UK’s record in tackling inflation is poor. Inflation in the eurozone has fallen to 6.1%, and even Italy, often seen as a struggling economy, has lower inflation rates at 8%.

The US, the world’s largest economy, has effectively managed inflation after implementing a series of rate hikes, resulting in a decrease to 4%.

However, global inflation remains a concern, as stated by the Federal Reserve chairman Jerome Powell, who noted that “inflation pressures continue to run high”.

Experts attribute the UK’s higher inflation to a combination of factors, including energy shocks and labor shortages.