Word on the Street #336 Summertime ruminations
Aug 21, 2025
In this engaging discussion, Sean Markowicz, a financial markets expert from Barclays Bank, shares insights on current UK and US inflation trends. He reveals underlying pressures in service and food prices affecting market decisions. The talk also navigates labor market uncertainties and how tariffs influence economic conditions. Sean highlights the resilience of the stock market despite economic concerns and underscores the importance of global diversification in investment strategies. Get ready for a nuanced take on today's financial landscape!
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UK Services Rise Masked By Volatile Items
- UK services inflation rose but much of the rise was driven by volatile items like airfares.
- Stripping volatile components shows underlying inflation easing, which pushed gilt yields down.
Sticky Food Prices Versus Weak Labour Market
- Food inflation remains sticky and influences household inflation perceptions and wage demands.
- Labour market weakness tempers pass-through to wages, leaving the Bank of England between sticky prices and soft employment.
Hiring Reluctance Suggests Slower Easing
- UK employers remain reluctant to hire amid higher taxes and business uncertainty.
- Markets expect Bank of England easing to be more likely in 2026 than 2025 as disinflation is gradual.