In a sea of economic data that always seems to disappoint, today’s inflation figures may plumb new depths. The Consumer Prices Index (CPI) rose by 8.7 per cent in the 12 months to May 2023. In other words, despite all the pain of higher interest rates, inflation remains unchanged.
It gets worse. Core inflation, which strips out more volatile prices such as energy and food, rose by 7.1 per cent — that is in fact up from the month before and represents the highest rate since 1992.
All this makes a rate rise at tomorrow’s meeting of the Bank of England’s Monetary Policy Committee all but inevitable. Borrowers can expect more anguish if they are unfortunate enough to come to the end of their fixed-rate mortgage any time soon.
Even prior to today’s figures, the squeeze was already feeling intolerable. And it is Londoners, as well as the under-40s, who are set to be hardest hit. The Institute for Fiscal Studies has laid out the scale of the crisis, warning that 1.4 million mortgage holders, including roughly 300,000 in the capital, will see their mortgage payments rise by at least 20 per cent of their disposable income as they move to higher rate deals. Meanwhile, rents continue to soar.
The challenge for the Prime Minister is vast. Rishi Sunak looks set to miss his key inflation pledge, while a putative Labour government may wonder what an economic inheritance it will receive. Meanwhile, the pain for households shows little sign of abating.
United on Ukraine
Ukraine must not only win a war but set out the groundwork for a prosperous peace. That is why today’s recovery summit, taking place in London, is critical.
The illegal Russian invasion has destroyed cities, villages and vital infrastructure, most recently the Kakhovka Dam. The international community must work together, using institutions such as the World Bank, to leverage funds to begin the rebuilding. President Volodymyr Zelenksy, for his part, must ensure Kyiv roots out corruption, laying the path for it to eventually join the European Union.
One place to start is the unlocking of the frozen £2.3bn of aid money raised by the sale of Chelsea FC, which, as the landmine charity Halo points out, has been stuck in limbo due to wrangling over where it should be spent. Funding the reconstruction of Ukraine cannot wait.
Pharrell rocks Paris
There was some scepticism when Pharrell Williams was named Louis Vuitton’s new men’s creative director, but the collection on display last night in Paris was cohesive and clever and certainly brought the A-listers into Paris.
Indeed, the show culminated in Pharrell joining Jay-Z on stage for a post-show gig. Perhaps the French capital isn’t quite as unsalvageable, as Simon English despairs in his column today on this page.
