LONDON Reuters British inflation surged further above the Bank of Englands target in June to strike 2.5, its highest since August 2018, placing a new focus on the BoEs plan to keep its huge stimulus programme in place.
Prices for food, fuel, secondhand cars, clothing and footwear rose as the economy bounced back from its lockdown slump, the Office for National Statistics said.
The jump exceeded all forecasts from economists polled by Reuters, who had mostly seen CPI edging up to 2.2 from May39;s 2.1, and comes a day after U.S. inflation hit its highest in 13 years at 5.4.
Sterling strengthened against the dollar and euro. Twoyear British government bond yields, which are sensitive to shortterm inflation and interest rates, touched a threeweek high.
The Bank of England will likely feel that the time is rapidly approaching to dial down the level of support they are providing to the economy, said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.
Most central bankers think the global surge in inflation will be temporary, and reflects supplychain bottlenecks as Western economies emerge from the coronavirus pandemic.
The BoE revised up its forecast for inflation last month to predict a peak of over 3, though its outgoing chief economist, Andy Haldane, sees it nearer 4 by the end of the year.
The BoE expects inflation to fall back towards its 2 target over the next couple of years, as subdued prepandemic price trends and weak pay growth resume….