FXStreet (Delhi) – Michael Sawicki, Senior Economist at Lloyds Bank, suggest that the trends in inflation will be a focus for the UK morning with the August CPI likely to post growth of 0.1%.
Key Quotes
“Annual CPI inflation rose to 0.1% in July, driven by a jump in the ‘core’ rate to 1.2%, a 5-month high. Relative to our own assumptions, particularly notable were the absence of a further drag on imported goods prices, such as furniture, that we would expect as a result of the stronger sterling exchange rate.”
“For August, evidence from the BRC shop price index suggests that prices of core goods categories including clothing and furniture in fact firmed substantially on the month. This is likely to underpin an unchanged rate of core inflation, at 1.2% in August.”
“For CPI inflation overall, a 3.3% fall in motor fuel prices, the initial impact of domestic gas tariff cuts by British Gas and ongoing supermarket discounting of food should limit any pickup in the headline rate. Our above consensus expectation of a 0.1% reading in August would also be above the BoE staff assumption built into the August Inflation Report.”
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