Britain's inflation keeps creeping up

Summary

Marketplace Morning Report: Britain's Inflation Keeps Creeping Up
Released: July 16, 2025
Host: Liana Byrne

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1. Rising Inflation in the UK

Overview:
Britain's inflation rate for June has surpassed expectations, increasing to 3.6% annually. This uptick is primarily driven by escalating motor fuel and food prices. The persistent inflation rate poses challenges to the Bank of England's target of keeping inflation around 2%.

Key Points:

• Inflation Rate: June's inflation stands at 3.6%, higher than both the previous month and forecasts.
• Primary Drivers: Significant rises in motor fuel costs and food prices, with food inflation reaching approximately 4.5% for the third consecutive month.
• Contributing Factors: Increased wholesale costs for food items like chocolate and cocoa, higher minimum wage expenses, and elevated business taxes.

Notable Quote:
Sean Farrington explains the situation:
"Inflation price is rising by 3.6% in the year to June. That's higher than it was last month and also higher than was expected for this month, driven by motor fuel costs. But also food prices."
(00:59)

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2. Chancellor Rachel Reeves' Investment Initiatives

Overview:
In response to the ongoing inflation challenges, Chancellor Rachel Reeves announced measures aimed at encouraging both individuals and businesses to take on more investment risk. The initiative includes a forthcoming advertising campaign to promote investment in stocks and shares, moving away from cash-heavy savings accounts.

Key Points:

• Investment Campaign: Targeting households to shift funds from low-interest cash accounts to stocks and shares.
• Pension Funds: Encouraged to invest in riskier assets to stimulate economic growth and increase investment in UK banks.
• Regulatory Changes: Adjustments to post-financial crisis regulations to allow banks more flexibility in taking risks, including extended permissions for issuing riskier mortgages.

Notable Quote:
Sean Farrington summarizes the Chancellor's message:
"Taking on more risk was the message from the chancellor."
(02:31)

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3. Global Market Movements and Economic Updates

Overview:
Asian markets showed mixed performances as investors responded to a new U.S.-Indonesia tariff agreement and hotter-than-expected U.S. inflation data. Additionally, tech stocks experienced a global rally following Nvidia's announcement to resume chip exports to China.

Key Points:

• U.S. Inflation: Increased to 2.7%, diminishing expectations for a Federal Reserve rate cut.
• Tech Sector: Nvidia's decision to restart chip exports to China led to a surge in global technology stocks.
• Other Global News:
  • Cuba: Labor Minister Marta Feito resigned after controversial remarks denying the existence of beggars.
  • Trade Deals: New agreements and ongoing negotiations affecting U.S. relations with Indonesia and Brazil.
  • Italy: Portofino enforces stricter regulations on tourist behavior to preserve its scenic appeal.

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4. Resignation of Cuba's Labor Minister

Overview:
Cuba's Labor and Social Security Minister, Marta Elena Feito Cabrera, resigned following backlash over her comments denying the existence of beggars in the country. Her statements were perceived as insensitive and out of touch with the economic hardships faced by ordinary Cubans.

Key Points:

• Controversial Remarks: Feito claimed there are no beggars in Cuba, attributing begging to opportunists seeking easy money.
• Public Reaction: Her comments sparked outrage, portraying the Cuban leadership as disconnected from the populace's struggles.
• Government Response: President Miguel Diaz Canel distanced himself from Feito's statements, leading to her resignation.

Notable Quote:
Will Grant reports on the incident:
"The minister clearly misjudged the outrage and anger her comments would cause and the extent to which they portrayed the country's leadership as unfeeling, authoritarian and deeply disconnected from the dire economic struggles of ordinary Cubans."
(04:27)

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5. U.S.-Indonesia Trade Deal Analysis

Overview:
The United States and Indonesia have reached a new trade agreement, granting American firms full access to the Southeast Asian market. In return, tariffs on Indonesian goods will be reduced to 19%, lower than initially proposed. However, some economists believe the benefits may be limited.

Key Points:

• Tariff Reductions: Specifically on mineral oils, fuels, nuclear reactors and parts, and soybeans (which already have a 0% tariff).
• Economic Impact: The reduction is expected to have minimal substantial gains, particularly as Indonesia maintains higher barriers on labor-intensive manufactured goods.
• Ongoing Negotiations: Discussions continue, with additional sectors potentially influencing future agreements.

Notable Quote:
Economics Professor Stephen Marks comments:
"The gains are not all that great... it seems that probably the gains will not be substantial."
(05:28)

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6. U.S. Investigation into Brazil's Trade Practices

Overview:
The United States has initiated an investigation into Brazil's trade practices, citing unfair methods that harm American businesses. This move intensifies existing tensions between the two nations, with potential tariff implications looming.

Key Points:

• Investigation Scope: Includes digital trade, intellectual property, access for U.S. ethanol in Brazil, and illegal deforestation.
• Potential Tariffs: Previous threats by President Trump of imposing 50% tariffs, with Brazil's President Lula da Silva vowing reciprocal actions if tariffs are enforced.
• Long-Term Relations: The probe could significantly impact U.S.-Brazil trade relations and broader economic interactions.

Notable Quote:
Katie Silver outlines the U.S. stance:
"The US says Brazil has for decades engaged in unfair trade practices harming American companies."
(06:40)

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7. New Regulations in Portofino, Italy

Overview:
The coastal town of Portofino in Italy has implemented a series of new regulations aimed at preserving its picturesque environment. Tourists are now prohibited from walking barefoot in swimwear or going topless, with fines of up to $580 for violations.

Key Points:

• Regulation Details: Enforced by luxury boutiques to maintain decorum and aesthetic appeal.
• Enforcement: Strict penalties to ensure compliance among visitors.
• Purpose: To protect the town's scenic beauty and uphold its reputation as a luxury destination.

Notable Quote:
Liana Byrne summarizes the new rules:
"Tourists will no longer be allowed to walk around barefoot in swimwear or topless. And if you break the rules, you'll be fined up to $580."
(06:40)

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Conclusion

The Marketplace Morning Report for July 16, 2025, highlights significant economic developments in the UK, including rising inflation and strategic investment initiatives by the Chancellor. On the global stage, trade dynamics shift with new deals and investigations affecting U.S.-Indonesia and U.S.-Brazil relations. Additionally, socio-political changes in Cuba and Italy reflect broader trends in governance and tourism management. As economies navigate these complex landscapes, the interplay between policy decisions and market reactions remains crucial for future stability and growth.

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For more detailed insights and updates, listeners are encouraged to tune into the full episode of the Marketplace Morning Report.

Transcript

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[Liana Byrne]

Britain's inflation keeps creeping up. Live from the UK, this is the Marketplace Morning Report from the BBC World Service. I'm Liana Byrne. Good morning. So this morning over on this side of the Atlantic, we learned that UK inflation in June was higher than expected. So what's going on? The BBC's Sean Farrington is covering this one. Hello.

[Sean Farrington]

Hi, Liana.

[Liana Byrne]

Sean, why is inflation in the UK still so sticky?

[Sean Farrington]

Yeah, that is the word. Because a lot of people would like to see prices rising at a slower rate. More, more like the 2% target that the bank of England has in the UK. But inflation price is rising by 3.6% in the year to June. That's higher than it was last month and also higher than was expected for this month, driven by motor fuel costs. But also food prices. For the third consecutive month, food prices on the rise again around four and a half percent. And speaking to experts this morning, you know, some of that obviously is to do with the wholesale cost of food, depending on which foods you're looking at. We've talked a lot in recent times about chocolate and cocoa prices, for example, being high. But also there's an element, people aren't too sure just how much yet is retailers passing on the increased minimum wage costs that have gone up in the UK and also increased taxes on businesses who have staff in recent months, that's gone up and there may be a little bit of evidence that those retailers are passing that on.

[Liana Byrne]

Now with all this, the Minister for Finance, we call her the Chancellor here in the uk, Rachel Reeves, she's announced steps to encourage people to invest in stocks and shares. What's all this about, Sean?

[Sean Farrington]

Yeah, this is the big annual speech that the Chancellor gives in the City of London, where there's an audience of business leaders, those from financial services, and will often be focused on the financial services sector. And Rachel Reeves spoke a lot in a variety of areas about people, businesses, investors taking more risk. That was the long and short of it. So for households and for individuals, it was, you're going to get an advertising campaign next year to try and make the pitch to you to don't have money sitting so much in in cash accounts and low interest rates, put it into stocks and shares. So the British public are going to see more of that next year for pension funds. They are being encouraged to invest in riskier investments to try and get more growth in the UK Economy and have more investment in the UK Banks. All those regulations that came in after the financial crisis when economies around the world went to pot and banks were told you're going to have more regulations, your high street business is going to have to be separate from the big global investment bank business. Well, actually, the rules around that are going to be changing now to enable banks to more risk. And then alongside that, lenders are being told actually you are allowed to give more risky mortgages out to more people. So taking on more risk was the message from the chancellor.

[Liana Byrne]

All right, John, thanks so much for joining us.

[Sean Farrington]

Thanks, Liana.

[Liana Byrne]

Okay, let's do the numbers. Asian markets were mixed as investors reacted to a new U.S. indonesia tariff deal. More on that later. And hotter than expected US inflation, which jumped to 2.7%, denting hopes of a Fed rate cut. And tech stocks rallied globally after Nvidia said will resume chip exports to China. Meanwhile, Cuba's labor minister has resigned after claiming there were no beggars in the country. Marta Feito faced fierce backlash and President Miguel Diaz Canel publicly distanced himself from her remarks. The BBC's Will Grant reports the minister.

[Will Grant]

For Labour and Social Security made the comments earlier this week at a session of the national assembly in which he spoke about people begging and rummaging through the dustbins in Cuba. Marta Elena Feito Cabrera appeared to deny their existence, saying there are no beggars in Cuba. There are people pretending to be beggars to make easy money, she said the minister clearly misjudged the outrage and anger her comments would cause and the extent to which they portrayed the country's leadership as unfeeling, authoritarian and deeply disconnected from the dire economic struggles of ordinary Cubans.

[Liana Byrne]

Will Grant reporting another day, another trade deal from President Trump. This time it's with Indonesia. American firms will enjoy full access of the Southeast Asian economy and in return Tariffs on Indonesian goods will be set at 19%, lower than originally planned. Indonesia say talks are still ongoing. Stephen Marks, an economics professor at Pomona College who spent years working in the country, has been weighing the pros and cons.

[Stephen Marks]

The gains are not all that great. So if we look at the top three categories of US Exports to Indonesia, mineral oils and fuels, nuclear reactors and parts, and soybeans. Soybeans have a 0% tariff already. The tariff rates on the others are between 0 and 5% or 5 to 10%. So it seems that probably the gains will not be substantial. Where Indonesia really has higher barriers to trade is against the products that other Asian countries would like to export to it, namely labor intensive manufactured goods.

[Liana Byrne]

Economics professor Stephen Marks there. Now, while Indonesia gets a deal, Brazil is facing fresh pressure. The US Is launching an investigation into what it calls unfair trade practices by Brazil, ramping up tensions as President Trump targets the country. Last week he threatened to impose 50% tariffs. Brazil's President Louis and Nasio Lula da Silva says if that happens, he'll reciprocate. Let's get the details from the BBC's Katie Silver.

[Katie Silver]

The US says Brazil has for decades engaged in unfair trade practices harming American companies. It says it's going to investigate the country under section 301, separating it from the so called Liberation Day tariffs that are being considered by the courts in the U.S. the probe will look into aspects including digital trade, intellectual property access for US Ethanol to the Brazilian market and illegal deforestation.

[Liana Byrne]

Katie Silver there. And finally to Italy and the picturesque coastal town of Portofino. Well, the luxury boutiques there have had had to issue a long list of banned activities. And tourists will no longer be allowed to walk around barefoot in swimwear or topless. And if you break the rules, you'll be fined up to $580. That's it. I'm Liana Byrne with the Marketplace Morning report from the BBC World Service.

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