One million vacancies and soaring wages fuel UK inflation fears

The strong recovery in Vacancies in all industries increased, with arts, entertainment and recreation posting the fastest rate of growth following the lifting of all remaining social distancing restrictions in England on Rising wage pressures come as businesses are already contending with higher costs in their supply chains from raw materials shortages and soaring shipping rates. “Together, these factors point to further inflation pressures ahead as firms try to pass on cost rises to consumers,” Pickering said. Data out Wednesday showed that UK inflation dipped unexpectedly to 2% in July from 2.5% the previous month, as prices for clothing, footwear and recreational goods rose at a slower pace than in June, the ONS said.The “tumble” in inflation “feels remarkably like the calm before the storm,” ING economist James Smith said in a research note. Smith said there was little doubt that headline consumer price inflation would go “well above” 3% later this year.The Bank of England said earlier this month that it expects inflation to rise even further above its 2% target in the coming months and that it will set interest rates to ensure inflation returns to that level.”We continue to look for the first rate hike in August 2022. But the strengthening inflation dynamic and strong recovery in domestic demand suggest the risks are tilted towards a hike even sooner that — perhaps as early as May 2022,” Pickering added.