On Friday it will be the first anniversary of the last Bank of England hike in interests rates in a volley of increases that took the cost of borrowing from 0.1% all the way to 5.25%.
The day before that, the Bank’s rate setting Monetary Policy Committee will reveal whether they will start relieving the pressure on businesses and borrowers by starting the long march back down from the top of the interest rate hill.
City markets and commentators are pretty divided on whether they will, and it certainly looks like a close call. At the start of the summer I was fairly convinced that 1 August would mark the turning point. Now I am not so sure. The new Labour government has just given the economy yet another adrenaline hit of spending power in the form of well-above-inflation pay awards for public sector workers, including 22% over two years for junior doctors. That follows the near 10% increase in the minimum wage back in the spring which is still working its way through the demand side of the economy.
Although food inflation has, thankfully, dropped dramatically since the painful peaks of 18 months ago there are some indications that the shockingly bad weather earlier in the year has disrupted fruit and vegetable production leading to wholesale prices starting to rise again.
Gas and electricity bills will also begin to pop up again in the autumn although hopefully that will be quickly offset by the weak oil price. Meanwhile growth is respectably robust — by recent standards.
Overall it just feels there is not yet enough overwhelmingly compelling evidence that inflation is fully back in its box to persuade three MPC hawks to discard their talons and convert to doves. So I am afraid it is likely to be another month of waiting after a long drawn out year of mortgage pain. Only savers will be celebrating that anniversary when it comes round on Friday.
