FT News Briefing New pain for China’s property sector
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Aug 17, 2023 Dive into the turmoil of China's property sector, marked by missed payments and rising fears of economic fallout. Explore the impact of lower energy costs in the UK driving a significant drop in inflation, while the UK's core inflation remains a challenge. The struggles of companies like Country Garden raise questions about the government's response and future stability in real estate. The discussion also touches on wage growth and its influence on monetary policy, revealing the complexities of managing ongoing inflation.
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UK Inflation Update
- UK inflation fell to 6.8% in July, mainly due to lower energy costs.
- Core inflation remains high, driven by a tight labor market and rising wages.
Core Inflation Drivers
- The UK's tight labor market contributes to high core inflation.
- Wage increases pressure companies to raise prices, creating a feedback loop.
Bank of England's Next Steps
- The Bank of England may need to keep interest rates higher for longer to combat inflation.
- This could involve more aggressive rate hikes or maintaining current rates until inflation subsides.