UK | Inflation set to rebound sharply after July lull
July’s fall in inflation is likely to represent only brief respite for consumers. After a larger than expected rise in the energy price cap, we now expect CPI inflation to reach 3.5% before the end of the year.
What you will learn:
- But while inflation is likely to move much higher in H2 2021, we expect the pickup to prove transitory and expect CPI inflation to return to 2% by end-2022.
- CPI inflation slowed from 2.5% in June to 2.0% in July.
- The ONS attributed almost half of the slowdown to strong base effects caused by a spike in prices last year when the economy reopened after lockdown.
Sterling’s woes, Kwarteng’s vows, Bailey in the middle
The negative market reaction to last week's fiscal announcements appears to be a function of doubts over the credibility of the UK government's long-term fiscal plans. Though we think the structural position is not as bad as last Friday's drop in asset prices implies, it's clear the government will struggle to retain credibility if it fails to engage with market concerns.Find Out More
BoJ to look through a temporary decline in monetary base
The Bank of Japan (BoJ) left monetary policy unchanged at today's (22nd Sep) meeting, maintaining current short- and long-term interest rates, despite another wave of yen weakening and upward pressures on JGB yields.Find Out More