Our monthly read on what moved investment markets over the past month and what it could mean looking ahead. This issue looks back at May.
In this issue
Inflation fell more sharply than expected, but the relief may be short lived as the Middle East conflict keeps feeding through to energy and food prices. We look at why the Bank is warning inflation could climb again, a surprise pickup in growth that has not eased the pressure on public finances, and a new Gulf trade deal set to give exporters a lift. There is also a read on a labour market that is starting to lose momentum.
The month in numbers
Inflation dropped to 2.8 per cent in the year to April, helped by lower energy bills, though the Bank has flagged a worst case where it could reach 6.2 per cent early next year. The economy grew 0.3 per cent in March, taking first quarter growth to 0.6 per cent, the strongest in the G7 so far. That good news was offset by borrowing costs, with ten year gilt yields briefly topping 5.17 per cent, their highest since 2008. The new UK Gulf trade deal is expected to be worth 3.7 billion pounds a year, while unemployment ticked up and vacancies fell to their lowest since 2021.
