UK inflation spikes at record rate in August

UK inflation rose at the fastest rate in at least 24 years in August as the price of transportation, restaurant meals and used cars spiked dramatically.

The annual rate of inflation rose by 3.2% in August, up from 2% in the 12 months to July, Britain’s Office for National Statistics (ONS) said Wednesday. The month-on-month increase is the largest recorded since the ONS began keeping records in January 1997.

Some of the uplift reflected coronavirus relief programs that were in place last summer, such as sales tax reductions in the hospitality sector and the government’s “Eat Out to Help Out” initiative, which heavily discounted restaurant meals.

But the UK economy has also been facing sustained upward pressure on prices driven by worker shortages and snarled supply chains linked to the pandemic and Brexit. That is weighing on the economic recovery and could force the Bank of England to bring interest rate hikes forward if inflation remains above its 2% target for longer than expected.

There were a record 1 million UK job vacancies in June to August and wages soared nearly 7% between May and July, according to the ONS. Rising wages come as companies are already contending with higher costs in their supply chains from raw materials shortages and soaring shipping rates.

Restaurants, pubs and supermarkets, including Iceland Foods and Nando’s, have had to close some locations due to staff shortages or because they have run out of ingredients. McDonald’s was forced to take milkshakes off its menu earlier this summer.

Supply chain disruptions and worker shortages are hampering Britain’s economic recovery. GDP growth slowed sharply in July, posting its smallest monthly increase since February, the ONS said last week.

A ‘whiff’ of stagflation

The economy remains 2.1% smaller than before the pandemic and economists at Berenberg now expect it to make a full recovery in the second quarter of 2022 instead of the first.

If prices continue rising, there is a risk that stagflation occurs, according to Berenberg senior economist Kallum Pickering, a phenomenon characterized by stubbornly high inflation and weak economic growth.

“The recent batch of UK data showing record labor demand and surging wages, rising inflation but weaker-than-expected real GDP growth has a whiff of stagflation to it,” Pickering said in a research note on Wednesday. “While the risk of such an outcome remains low, in our view, it puts the [Bank of England] in a tricky position nonetheless,” he added.

The unexpectedly sharp increase in inflation could force the Bank of England to hike interest rates sooner than anticipated, Pickering said.

The spike in UK inflation follows data out Tuesday showing that the rate of inflation in the United States slowed slightly in August as some price distortions eased, such as for used cars. But prices remain elevated across the economy amid persistent supply chain bottlenecks.

“There are too many reasons to expect supply shocks in other areas to be confident inflation isn’t going to settle at [a] slightly uncomfortable level for a sustained period,” Societe Generale strategist Kit Juckes said in a note on Wednesday.

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Disneyland Figures Out a New to Make More Money

Disneyland Figures Out a New to Make More Money

AP Photo/Jae C. Hong

(CNN Business) – Millions of guests visit Disney theme parks each year, and most of them probably loathe waiting 90 minutes to ride “Peter Pan’s Flight.” So now Disney is rolling out a new service that will help park goers streamline their visits and cut down on wait times.

Genie” — which debuts this fall at California’s Disneyland and Florida’s Disney World — is a new digital service that will “maximize your park time, so you can have more fun,” according to the company.

“From specific attractions, foodie experiences and entertainment, to general interests like Disney princesses, villains, Pixar, Star Wars, thrill rides and more — just tell Disney Genie what you want to do and it will do the planning for you,” Disney (DIS) said in a blog post on Wednesday.

Disney Parks Chairman Josh D’Amaro told CNN Business this week that the company listened to guests who want the theme park experience to be simpler, straightforward and tailored “for them.”

“You tell Genie what you are interested in specifically — whether that be an attraction, a food, a character — and Genie’s going to come back to you and tell you how to make the most of your day,” D’Amaro said.

The free service will be built into Disney Parks’ established apps along with a paid version called “Disney Genie+” that allows guests to access the “Lightning Lane” for $15 at Disney World and $20 at Disneyland.

“Lightning Lane” is basically a paid version of a benefit that used to be free for guests: Disney’s FastPass, which allowed visitors to book ride and attraction times in advance to avoid long waits.

As Disneyland retires the Fastpass and unveils their new pay-for Genie+ service to manage lines/crowds, Nikki Medoro and Bret Burkhart wonder if people will actually pay more to avoid lines. Also, Brett Favre says kids should avoid tackle football before age 14.