UK inflation: shocking computer and Brexit games
- UK inflation data for Jul-19 were distorted by computer games again, which caused the annual CPI rate to exceed expectations by 0.2pp at 2.1%. Weakness in airfares offset this in the RPI, which slowed to 2.8% (289.5) as forecast.- Computer games prices may hold firm in August, as in 2018, while payback from surprises in clothing and airfares will probably come later amid broader seasonals.
- Further falls in the inflation rate towards an October trough remain likely, but the July surprise raises that trough to about 1.7% in my forecast. The outlook beyond that depends on Brexit, where I still expect the UK to leave without a deal.
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