Commenting on today’s UK inflation data, Melanie Baker, Economist, Royal London Asset Management, said:
“There was some better news for the consumer today - inflation is rising at a slower pace than pay growth. Today’s release gives the Bank of England a bit more breathing space. However, with domestic inflationary pressure still likely to pick up in coming quarters, the Bank of England still looks on track to raise rates next year, assuming some of the Brexit uncertainty is behind us.
“In a reversal of developments last month, consumer price inflation (CPI) surprised consensus on the downside by two-tenths in September, having surprised on the upside by three-tenths in August.
“In coming months, the tight labour market should keep up pressure for pay rises. But, for now, the weaker than expected data today brings the headline inflation figures back into line with Bank of England forecasts from August.
“September CPI came in weaker than expected at 2.4% year on year (consensus: 2.6%) after 2.7% in August. The main drivers of the move down in CPI were largely the same as those pushing inflation up last month (theatre shows, food, sea fares and clothing), offset in part by upward pressure from energy prices Computer games - a volatile component- also added to the downward pressure.”
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About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £117 billion of assets and employs 89 investment professionals. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
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Issued September 2018 by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.