"These are not figures that give policymakers breathing space. They're a warning that inflationary pressures are proving far more resistant than hoped."
"The underlying drivers are structural. The UK's productivity growth remains anaemic, while wage increases in many sectors continue to outpace output."
"When wages rise faster than productivity, prices follow. This is how inflation becomes embedded - not as a short-term shock, but as a feature of the system."
"Investors still appear to be betting on rate cuts in the coming months, which we believe is misplaced. The Bank of England cannot credibly loosen policy while inflation sits almost double its 2% target. The reality is that rates are likely to remain at current levels until well into 2026. There's even a non-trivial chance that the next move will be upward rather than down."
UK annual inflation remained at 3.8% in September, with core inflation near 3.5%. deVere Group expects the Bank of England to hold interest rates until at least mid-2026 and warns of a real chance of future rate rises. Structural factors are driving inflation: anaemic productivity growth and wage increases that outpace output. When wages rise faster than productivity, prices follow and inflation can become embedded rather than temporary. Markets and investors are underestimating the likely duration of high rates; premature cuts could reignite inflation and would damage monetary credibility.
Read at London Business News | Londonlovesbusiness.com
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