Finance Monthly - June 2022

9 Finance Monthly. The Mon t h l y Round -Up In April, UK inflation jumped to a more than 40-year high, partly due to rising food, energy and fuel prices, as well as the ongoing conflict in Ukraine. According to the most recent data from the Office for National Statistics (ONS), the consumer price index (CPI) measure of inflation rose to 9%, the highest it’s been since calculations began in 1997. Additionally, the ONS estimates that CPI hasn’t been higher since 1982 when it peaked at around 11%. This is up from a 30year high of 7% seen in March. Chancellor of the Exchequer Rishi Sunak commented: “Countries around the world are dealing with rising inflation. Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.” “We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action,” the Chancellor continued. UK Inflation Hits 40-Year High of 9% Investors are feeling rattled as evidence of record-high inflation spreading through the US economy becomes apparent. Major American retailers are reporting consumers cutting back on expensive items amid the cost-of-living crisis. In mid-May investors wiped nearly 25% off Target shares after its profit halved. Meanwhile, Walmart was down 1.3% after already falling more than 17% in the two sessions after it announced poor results on Tuesday 17th May. Target’s earnings revealed consumers have been spending more on food and household essentials but cutting back on high-margin items. Meanwhile, Walmart’s earnings revealed consumers had moved to buy lower-margin basics. Federal Reserve Chair Jerome Powell pledged the US central bank would rise interest rates as high Investors Rattled as Inflation Hits US Consumers as necessary to combat spiralling inflation. “We think the developing impact on retail spending as inflation outpaces wages for even longer than people might have expected is a principal factor in causing the market sell-off today,” commented Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. “Retailers are starting to reveal the impact of eroding consumer purchasing power.”

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