The gulf between price pressures in the US and the UK is likely to widen to levels not seen since the late 1970s this week, as Britain increasingly becomes a global inflationary outlier.
Figures out last week confirmed US consumer price inflation is abating fast, with the annual figure for June falling to a two-year low of 3 per cent. That contrasts with economists’ expectations that last month’s CPI reading for the UK, due out on Wednesday, will come in at above 8 per cent.
As of Friday afternoon, economists polled by Reuters expected, on average, a figure of 8.2 per cent for June. If they are right, that would mean UK inflation is now 5.2 percentage points higher than in the US — the widest gap since November 1977, when the country was beset by economic stagnation and political strife.