Stronger than expected inflation not what Bank of England predicted
19 September 2018
Commenting on UK Consumer Price Index data out today, Melanie Baker, senior economist at Royal London Asset Management said:
“Today’s figures look likely to surprise the Bank of England somewhat. As of August, BoE staff were projecting 2.4% inflation for August, and that was before July’s small downside surprise.
Domestic inflationary pressure seems likely to pick up in coming quarters. Brexit permitting, that should leave the BoE on track to raise rates next year once at least some of the uncertainty is behind us.
There was bad news for the consumer as inflation moved higher in August. Meanwhile, the stronger than expected inflation data raises some questions for the BoE.
The main drivers of the move up in headline CPI inflation included theatre shows, computer games, sea fares and clothing. Some of these impacts may well reverse and there was some downward pressure from mobile phone charges, furniture and households goods (the latter two perhaps partly reflecting the past boost from sterling weakness wearing off).”
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