The biggest news this week came yesterday when the ONS released data showing that inflation had gone up once again in the UK. It is now sitting at a 40-year high of 9.1%. (The last time inflation was this high, Margaret Thatcher was Prime Minister and Charles and Diana had only recently got married.)
The key causes of this are both fuel/gas prices and food costs.
Petrol this week once again rose now hitting an average of 1.89 a litre. Figures also showed that retail sales were down at the same time as food prices were up. In the last year for example pasta has gone up by 16% in price, margarine by 26% and chicken by 13.5%. One of the major causes of food price hikes is the ongoing war in Ukraine. Ukraine is often called the ‘breadbasket of Europe’ and the horrific war has led to a collapse in Ukrainian exports.
This week has also been marked by a set of strikes that have brought the UK’s railways to a halt. It has been speculated that these are the first of many as workers fight back against small wage increases that are below inflation and thus in effect pay cuts. Many expect the UK to face a summer of strikes as union members in multiple industries and sectors are balloted over the coming weeks.
News came this morning that the Government had lost two key by-elections by large majorities in both the north and south of England. This has further added to the instability of the Government and put even more pressure on the Prime Minister whose position is precarious, to say the least.
In the currency markets, the Pound has been pretty stable against the Dollar, actually gaining a point over the course of the week. Against the Euro, we saw a small dip midweek but it has ended where it began. The picture is the same with the USD/EUR pairing where there has been little movement.
This morning we saw the EU Leaders at their summit formally endorse Croatia’s adoption of the Euro. The final legal changes will be enacted next month and Croatia is now almost certain to replace the Kuna in January next year.
To end the week on a more diverse note, this week in Seville, the authorities began naming and ranking heat waves in an effort to raise awareness of the dangers of these weather conditions. It will follow similar rules to hurricanes and the city hopes other areas will follow suit.