Rising energy and food prices are going to hit households hard this winter. Kraft Heinz has warned of commodity price increases “across the board”, making it necessary for the international food giant to raise its own prices around the world.
The increase in the UN global food price index (see commentary Food & cotton prices climb to a decade high, October 9th 2021) will ripple through developed markets, including the UK. Fertilizer prices have surged this year.
But gilt yields are rising too because the labour market is very tight. The number of payrolled employees rose again by 207k (flash estimate) to a record high of 29.180m in September. This is 122k above the February 2020 level.
The job vacancy data were even more bullish, hitting a record 1.102m in Q3, according to official ONS data.
Notably, one measure of wage growth – PAYE median monthly pay – is accelerating, up 9.9% compared to September 2019 (or 4.8% annualised).
All in all, the labour market data support the more hawkish statements coming from MPC members in recent days, and the move by markets to price in a December rate hike. This now looks inevitable.
