LONDON, Oct 5 Reuters - The economic bounceback after coronavirus lockdowns is being hampered by problems in supply chains, a jump in inflation and the risk of a rise in unemployment, complicating the task for policymakers to steer the recovery.
The former Bank of England chief economist Andy Haldane says Britain is in a VILE era of low inflation, volatile expansion.
Financial markets think the BoE is all but certain to raise interest rates by February but some economists, worried by signs of a flagging recovery aren't so sure.
Below are some of the indicator of the economy that could be on the minds of economic policy makers.
In August, the UK's inflation rate hit 3.2%, highest level in almost a decade. Some one-off factors accounted for the record jump in July, but the BoE believes inflation is heading above 4%, more than double its 2% target.
The BoE is watching for any signs that consumers are losing confidence in inflation in the longer term.
Optimities for inflation in the year ahead surged sharply in September, according to a Citi YouGov survey which could have weighed on the minds of BoE rate-setters. They said last month that the case for raising rates was strengthening.
While Britain's economy grew quickly earlier this year as it reopened from a third COVID lockdown, the latest readings show this momentum has largely dissipated. Economic growth slowed to a crawl in July, according to official data, and surveys of businesses and consumers suggest sluggish growth persisted into the second half of the year - even before the most severe supply chain problems reported in recent weeks.
There has been no let-up in the supply chain and staffing issues for British manufacturers dealing with hefty delays from suppliers, according to the latest IHS Markit CIPS survey of business.
That even before Panic-buying at petrol stations, caused by a shortage of truck drivers, led in late September to the largest drop in car traffic since early June - another unpromising sign for the economy.
The shortage of workers, something seen in other economies around the world, has worsened since Britain took off from the European Union and ended free movement of workers from the bloc. On Tuesday, Prime Minister Boris Johnson denied that Britain was in a crisis and said that its natural ability to sort out its logistics and supply chains is very strong. The supply chain disruption and rising inflation prompted a good hit last month to the GfK gauge of consumer confidence – historically a hefty indicator of household spending.
Working people are also facing state benefits and tax increases for private households.
BoE data released last week suggested that consumers are once again leaning towards spending more than saving.
In six of the last seven monthly reports, unemployment rates fell, helped by the economic recovery and the government's furlough programme.
That scheme ended at the end of September and the BoE is keeping an eye on whether unemployment is about to rise again.
Wages have risen rapidly, although the statistical measure of earnings growth has been boosted by the official distortions caused by the pandemic. Still, inflation has started to bite into earnings: the official real-terms measure of total wage growth has declined for three months running.