19 September 2018

Stronger than expected inflation not what Bank of England predicted

5 min read

Margherita Orlandini, Corporate PR Manager, Royal London
Margherita Orlandini

Corporate PR Manager, Royal London


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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Margherita Orlandini, Corporate PR Manager, Royal London

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 £114 billion of assets and employs 92 investment professionals as at December 2018. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

For professional clients only, not suitable for retail investors.

Issued February 2019 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.

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