Report
Heteronomics
Philip Rush
EUR 171.00 For Business Accounts Only

Inflation: subdued enough to buy the BoE time


  •  UK inflation in June was on the soft side, especially relative to the Consensus, as it defied the collective expectation and declined by 23bp. Underlying trends were stronger, but the inflationary impulse was weaker than even my dovish forecast.
  • Recreation and transport weighed more than I forecast, but the surprise was not in games & toys or petrol. AV equipment and vehicle prices were, which implies past strength was more transitory than GBP transmission. Furniture and clothing inflation remains strong relative to respective PPI pressures.
  • Altogether, the peak in my CPI inflation forecast has fallen to 2.9% y-o-y (from 3.1%) and is the weakest outlook in over 4-months. This dip alleviates pressure on the MPC in the short-term, but the trade-off is increasingly uncomfortable amid falling unemployment. I still expect the first BoE rate hike to slip to May-18


    • 19/07/2017 4 EN
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    Heteronomics
    Heteronomics

    Heteronomics provides UK-centric macro research. A hallmark attention to detail delivers a depth of analysis beyond what the sell side now delivers. Clients can also experience events that privately provide insights on these topics. Have a bespoke request for research or an event? Let us know. Clients can expect assistance with their own requirements to the extent it doesn't impinge upon other clients. Think of it as retaining an expert economist, without the large overhead.

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    Philip Rush

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