In March, British households continued to face the financial burden of rising food and energy costs as inflation surged above expectations.
Despite three months of decreasing Consumer Price Index (CPI) figures since October’s record high, there has been an unexpected surge in the CPI for this past February. According to The Office for National Statistics latest figure reveals a 10.1% increase annually – higher than economists’ projected 9.8%.
March brought a year-over-year increase of 8.9% in inflation, as measured by the CPIH index which is higher than anticipated yet still lower compared to February’s figure. Core CPI also held steady at 5.7%, which has caught the attention of The Bank Of England given that they hoped for an improvement from last month’s results. This marks a 0.8% monthly rise between January and March 2023
March 2023 saw the highest annual inflation rate since records began, largely due to increasing costs of housing and household services such as electricity and gas, along with food items like non-alcoholic beverages. This was evidenced in a report released on Wednesday by ONS.
In recent months, unions and workers in various industries have seen a wave of industrial action to demand better pay and working conditions. The cost of living has gone up just as significantly – with prices for food and energy increasing by nearly 20%, the highest 12-month surge since 1976!
On Wednesday, Jeremy Hunt declared Britain’s commitment to reducing inflation. With the OBR forecasting halving it this year and £3,300 of annual cost-of-living support per household through taxes on energy profits, U.K.’s Finance Minister believes that a successful deflationary effort can be achieved.
Tough Job For The Bank Of England
Last month, the Bank of England nudged interest rates upwards from 4% to a higher-than-usual rate of 4.25%, and it looks likely that this upward trend will continue with markets forecasting further increases when their next meeting rolls around in May.
Albeit temporarily softened by favourable energy prices, economists predict an overall significant drop in April’s figures – caused mainly by last year’s 54% hike to the nation’s price cap on electricity and gas bills.
In February, the U.K.’s economic stagnation was widely felt in light of labor strikes and a long-running cost of living crisis. Analysts note that the decision makers may be divided on increasing interest rates any further come May due to worries about an overall lacklustre economy.
Despite some positive signs of easing, the central bank remains cautious about overall inflation and is not yet satisfied that price volatility has been properly contained.
Yesterday’s job market statistics showed a clear connection between rising wages and inflation, particularly in service-oriented industries. As the labor market continues to tighten, wage growth is pushing up prices for consumers.
The latest economic figures released by the U.K on Tuesday show a slight increase in unemployment, but an unexpected rise in employment and drop in activity levels. This implies that despite certain signs of softening, the job market as a whole is still at historically low-levels of tightness according to BoE estimates.
The Monetary Policy Committee is not finding comfort in the latest report, which suggests that it will take an extended period of economic stagnation to bring inflation back down to its target rate. Even though energy prices may help slow inflation over the next six months, this alone appears insufficient for long-term containment.
The Bank has made great strides in its mission to combat inflation, but now must remain vigilant and ready for action. Another rate hike appears increasingly likely this May unless the economic data signals a definite slowing of price increases. Otherwise, stopping prematurely may prove an even greater mistake than pushing too hard.
Meta Platforms Inc (META.O) took another step towards streamlining their business as CEO Mark Zuckerberg cuts engineers and related tech teams in preparation for a “year of efficiency” by 2023 – the first big tech to announce mass layoffs twice this year, totaling 10,000 employees across multiple months.
On Wednesday, Meta employees expressed their dismay over the looming layoffs that had been predicted. Unease amongst staff was palpable; questions flooded an internal company forum prior to a town hall meeting devoted to discussing the cuts.
Meta Platforms Inc Shares Up
After the pandemic created a digital advertising and cloud computing boom, Meta responded by making significant changes to its workforce in order to stay competitive. Over 11,000 employees lost their jobs–13% of those employed at that time and multiple projects were put on hold as middle managers were cut back.
These moves seem to have been well-accepted by investors: since then shares of Meta have skyrocketed almost 80%, outpacing even the Nasdaq Composite’s impressive 16% rise over this same period.
The first-quarter results will be revealed on April 26th, and are expected to make strides due to increasing digital ad spend and government action against their main competitor TikTok.
Happening Today- U.S. Unemployment Claims
The Department of Labor will release figures on unemployment claims. This enables traders to stay in-the-know about America’s economic health. The data shows how many individuals filed for unemployment over a given period, with gains typically signaling strength and losses indicating fragility.
By closely monitoring these changes, those shaping monetary policy decisions can better understand what drives consumer spending – an essential factor impacting US currency values.
In the week ended April 8, initial unemployment claims rose significantly to reach 239,000. This marked a sharp rise since February and was at the highest level in almost two years according to recent reports.
Continuing claims decreased slightly but still remained high with 1.81 million individuals claiming benefits as of last week; however this did result in an overall decrease in the insured unemployment rate which was down to 1.2%.
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