British annual inflation has hit a fresh 40-year high, official data showed yesterday, further eroding workers’ wages and pressuring the Bank of England to keep on raising interest rates.
The rate edged higher to 9.1 percent last month from 9 percent in April, remaining at the highest level since 1982, the British Office for National Statistics (ONS) said in a statement.
British inflation is set to top 11 percent before the end of the year, the Bank of England said, fueled by soaring energy prices that have raised the prospect of a global recession.
British inflation increased last month on “continued steep food price rises and record-high petrol prices,” ONS Chief Economist Grant Fitzner said.
This was offset by clothing costs rising by less than a year earlier and a drop in prices of computer games, he added.
Decades-high inflation is causing a cost-of-living crisis.
The UK’s railway workers are this week staging the sector’s biggest strike action in more than 30 years, as soaring prices erode the value of wages.
“The further increase in consumer prices index [CPI] inflation to 9.1 percent underscores the severe pressure that businesses and households are under,” said David Bharier, head of research at the British Chambers of Commerce. “This inflationary surge sits alongside a poor economic outlook and unless the government acts with urgency to encourage businesses to invest, the chances of a recession will only increase.”
Countries around the world are being hit by soaring inflation as the Ukraine war and the easing of COVID-19 restrictions fuel energy and food price hikes.
That has forced central banks to hike interest rates, risking the prospect of recession as higher borrowing costs hit investment and consumers further in the pocket.
The Bank of England has raised its key interest rate five times since December last year.
“The modest rise in CPI inflation ... won’t prevent the Bank of England from raising interest rates further, but it may encourage it to opt again for a quarter-point rate hike at its next meeting in August rather than upping the ante” with a half-point rise, Capital Economics chief UK economist Paul Dales said.
It comes as the UK faces strikes across other sectors. Lawyers in England and Wales have voted to walk out from next week in a row over legal aid funding.
Teaching staff, workers in the state-run National Health Service and the postal service are also mulling strike action.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, has decided to slow down its 3-nanometer chip production as Intel Corp, one of its major customers, plans to push back the launch of its new Meteor Lake tGPU chipsets to the end of next year, market researcher TrendForce Corp (集邦科技) said yesterday. That means Intel has canceled almost all of the 3-nanometer capacity booked for next year, with only a small amount of wafer input remaining for engineering verification, the Taipei-based researcher said in a report. Based on Intel’s original schedule, TSMC was to start producing the new chipsets in
DATA SHOW DOWNTURN: Manufacturing in Taiwan contracted as production and demand slumped, while growth in chip exports last month eased in South Korea World chip sales growth has decelerated for six straight months in another sign that the global economy is straining under the weight of rising interest rates and mounting geopolitical risks. Semiconductor sales rose 13.3 percent in June from a year earlier, down from 18 percent in May, data from the global peak industry body showed. The slowdown is the longest since the US-China trade dispute in 2018. The three-month moving average in chip sales has correlated with the global economy’s performance in the past few decades. The latest weakness comes as concern about a worldwide recession has prompted chipmakers such as Samsung
Italy is close to clinching a deal initially worth US$5 billion with Intel Corp to build an advanced semiconductor packaging and assembly plant in the country, two sources briefed on discussions said yesterday. Intel’s investment in Italy is part of a wider plan announced by the US chipmaker earlier this year to invest US$88 billion in building capacity across Europe, which is striving to cut its reliance on Asian chip imports and ease a supply crunch that has curbed output in the region’s strategic auto sector. Asking not to be named due to the sensitivity of the matter, the sources said the
Malaysia is scrambling to protect its assets as the descendants of the last sultan of the remote Philippine region of Sulu look to enforce a US$15 billion arbitration award in a dispute over a colonial-era land deal. In 1878, two European colonists signed a deal with the sultan for the use of his territory in present-day Malaysia — an agreement that independent Malaysia honored until 2013, paying the monarch’s descendants about US$1,000 per year. Now, 144 years later after the original deal, Malaysia is on the hook for the second-largest arbitration award on record for stopping the payments after a bloody incursion