16 May 2023 - March decline highlights the fragility of the recovery
The Bank of England is getting closer to being able to pause its cycle of interest rate hikes that have been running since December 2021 as food inflation has peaked according to several major supermarkets. Having reached close to twenty per cent, and threatening to force the Central Bank into raising rates to a potentially dangerous level where they raise concerns over their effect on demand and therefore growth, prices of essential foodstuffs are showing signs of abating. In a call with Bank of England Governor, Andrew Bailey, the heads of the major supermarket chains confirmed that prices are beginning to fall and are now at a stage where the lag between wholesale prices beginning to fall and retail prices steadying is taking place. Given the need for supermarkets to fix prices for fresh items well in advance, the supermarkets face a challenge to balance what they are paying their suppliers and growers against what they are charging shoppers. It is unlikely that the Government or Central Bank will feel comfortable and want to declare victory over inflation until there is tangible evidence that there is a significant fall in inflation which is still close to double figures. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.