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UK core CPI soars to highest level since 1992; Bitcoin slips below $27k

The Bank of England will likely continue to increase rates as inflationary pressures fail to subside.

Inflationary pressures in the UK continue to escalate as the country’s core Consumer Price Index (CPI) reached its highest level since March 1992. Data published by the Office of National Statistics revealed that the core CPI for April (excluding energy, food, alcohol and tobacco) came in at 6.8%, a margin higher than the expected figure of 6.2%. 

The numbers are higher than expected for a third consecutive month. The Bank of England is likely to keep raising interest rates in the coming months, with some predicting an increase from 4.50% to 4.75% in June. 

Responding to the data, former Bank of England monetary policy committee member Sushil Wadhwani told the BBC the numbers are “incredible disappointing”, expressing fears that inflation is becoming “embedded” in the UK economy. 

He said: “The key thing is about these numbers today is not only that they were disappointing today, but they’ve been disappointing for several months. What’s beginning to worry me – and perhaps more importantly to worry the Bank – is that inflation is becoming embedded, that people are expecting inflation to stay high for longer. That obviously a dangerous development.”

The 6.8% core CPI excludes food, energy, alcohol and tobacco.

General consumer prices including all items (i.e. inflation) eased from 10.1% in March to 8.7% in April.

While inflation has eased down to single digits, it has fallen less than many expected, including the Bank of England. This figure still places Britain at the joint highest rate of inflation among the advanced economies of the G7, sharing the spot with Italy. 

Annual food and drink price inflation fell a marginal amount from 19.2% in March (the highest rate since 1977) to 19.1% in April – an eye-watering figure for British consumers. Sugar and olive oil, for instance, are still seeing a price increase of more than 40%.

Bitcoin fell nearly 2% following the news, sliding down to $26,700 (CoinGecko).

Bitcoin has slumped below the $27,000 psychological mark.

The April CPI reading in the US earlier this month painted a different picture.

On May 10, the American Bureau of Labor Statistics (BLS) revealed that US CPI inflation fell to 4.9% in April, beating economist forecasts of 5.0%. The announcement had an immediate impact on the price of Bitcoin (BTC), which rose over 1% to above $28,000 moments after.

Read more: CPI inflation eases to lower-than-expected 4.9%; Bitcoin rises above $28k

The US Federal Reserve’s Federal Open Market Committee (FOMC) hinted that it’s now considering pausing the run of rate increases that have taken its benchmark overnight interest rates from about 0% in early 2022 to the current range of 5.0%-5.25%.

Regarding the end-point of rate increases, Fed Chair Jerome Powell optimistically stated: “We’re closer, or maybe even there.”

Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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