Evelyn Reynolds

U.K. inflation held steady at the Bank of England’s 2% target in June, Official National Statistics data showed Wednesday.
The headline reading came in above analyst expectations at 1.9%, according to economists polled by Reuters.
Services and core inflation were both in line with the previous month.

Alexander Spatari | Moment | Getty Images

U.K. inflation held steady at the Bank of England’s 2% target in June, Official National Statistics data showed Wednesday.
The headline reading came in above analyst expectations at 1.9%, according to economists polled by Reuters, and was in line with the previous 2% reading in May.

Sterling rose slightly shortly after the release, trading at $1.2977 by 7:21 a.m. London time.
Services inflation — which is closely watched by the BOE, given its dominance within the U.K. economy and its reflection of domestically-generated price rises — remained at 5.7% in June.
Core inflation, excluding energy, food, alcohol and tobacco, was 3.5%, also on par with the 3.5% recorded in May.

Higher restaurant and hotel prices were the largest contributors to upward pressure, while clothing and footwear costs posted the biggest declines, the ONS said.
Consumers are increasing their spending on leisure activities over the summer months, including on cultural experiences and concerts as high-profile artists such as Taylor Swift, Bruce Springsteen, Pink and Sting tour the country.

Bank of England rate cut in focus

Investors have been eyeing a potential August interest rate cut, as headline inflation showed signs of sustained easing. Market expectations of such a trim waned just after the release of the latest print.
Jane Foley, head of FX strategy at Rabobank, said that the stubbornness of services inflation could invite caution from BOE policymakers ahead of their meeting next month.
“It’s really not a done deal for August,” she told CNBC’s “Squawk Box Europe” on Wednesday.
“I think many of the members of the policy committee, and a lot of economists will be looking at that services sector inflation and worrying a bit,” she added.
Jonathan Haskel, a member of the BOE’s Monetary Policy Committee, last week said that he thought rates should remain on hold due to continued pressures in the labor market.
BOE chief economist Huw Pill added later in the week that the timing of a rate cut remained an “open question” due to “uncomfortable strength” in wage growth.
The BOE’s main interest rate has stayed at a 16-year high of 5.25% since August 2023, back when inflation was 7.9%.
Wednesday’s reading is the first since the U.K.’s general election on July 4, but does not reflect the change in government. The U.K.’s new chief secretary to the Treasury, Darren Jones, said in a statement that prices remain too high.
“We face the legacy of fourteen years of chaos and economic irresponsibility. That is why this Government is taking the tough decisions now to fix the foundations so we can rebuild Britain and make every part of Britain better off,” he said Wednesday. More

“Türkiye stands out with a staggering growth of over 157% in wealth per adult between 2022 and 2023, leaving all other nations far behind,” Swiss bank UBS wrote in its Global Wealth Report 2024.
The next-highest countries in terms of average wealth growth per adult were Qatar at 20% and South Africa with about 16%. In the U.S., average wealth per adult grew just 2.5%.
Inflation in Turkey sits at just over 71%, an eye-watering figure for its population of 85 million people, many of whom have seen a dramatic drop in their purchasing power over the last several years.

Golden Horn and Bosphorus at sunset, Istanbul, Turkey
Matteo Colombo | Digitalvision | Getty Images

Turkey came out miles ahead of the rest of the world in an annual global wealth ranking — in a result that may come as surprising, given the country’s high levels of inflation.
“Türkiye stands out with a staggering growth of over 157% in wealth per adult between 2022 and 2023, leaving all other nations far behind,” Swiss bank UBS wrote in its Global Wealth Report 2024, using the local spelling for the country’s name.

The next-highest countries in terms of average wealth growth per adult were Russia and Qatar with nearly 20% and South Africa with just over 16%. In the U.S., average wealth per adult grew by nearly 2.5%.
Inflation in Turkey sits at nearly 72%, an eye-watering figure for the country’s 85 million people, many of whom have seen a dramatic drop in their purchasing power over the last several years. In the last five years, the Turkish lira has lost nearly 83% of its value against the dollar, and the currency trades at 33 lira to the greenback as of 09:07 a.m. London time on Wednesday.
But for Turks who own assets like homes, wealth has grown, as inflation pushes up the costs of those holdings.
The UBS report defines net worth or “wealth” as “the value of financial assets plus real assets (principally housing) owned by households, minus their debts.” In a call with journalists, some of the report’s authors broke down the relationship between inflation and wealth rises in Turkey.
“In certain ways, the high pace of inflation also helps explain why wealth has risen much much more in local currency terms, at least [more] than in other countries because it’s worth keeping in mind that wealth is measured in nominal terms,” Samuel Adams economist at UBS Global Wealth Management, told CNBC.

“If inflation is very high, what tends to happen is that if you have a real asset like housing, the house prices tend to rise in line with inflation, if not even faster,” he said. “So those people with have homeownership, or who have equities, which also tend to perform fairly well in those environments, they tend to see their wealth accumulate a bit faster.
“Of course, it doesn’t mean that everybody benefits to the same extent,” Adams added. “If you’re not in those assets, if your wage rises don’t keep pace with inflation, then, of course, it will be fairly negatively affected.”
The report also noted the “currency effect”, which is what changes wealth growth the most — local currency growth figures for wealth are often significantly different from those in dollar terms.
“Türkiye’s already exceptional growth of over 63% in USD … more than doubles to nearly 158% in Turkish lira,” it said. Other examples in the report included Japan, which in dollar terms has seen less than 2% average growth in wealth per adult in U.S. dollar terms between 2022-23, but in local currency that growth was 9%.

Cityscape at sunset on March 4, 2024 in Istanbul, Turkey.
Dia Images | Getty Images News | Getty Images

Evaluating countries’ average wealth growth between the years of 2008 and 2023, “the most dramatic evolution has taken place in Türkiye,” UBS wrote, “where average wealth per adult in this period has shot up by 1708% in local currency.”
UBS Global Wealth Management’s Chief Economist Paul Donovan pointed out that being asset-rich does not necessarily mean being cash-rich — in Turkey, this could actually be the opposite.
“In terms of living standards rather than wealth, it’s also important to remember that if you own a house, the value of your house has gone up, but your real wage may be negative at the same time. So you can be … asset rich and cash poor,” Donovan said last week.
“That’s certainly a possibility, where a lot of the stresses that have arisen in the Turkish economy over the last few years have come about because of negative real income,” he added, “not necessarily what’s happening on the asset side.” More