UK | Inflation surprise triggers a change of MPC tone
Another upside inflation surprise points to the CPI measure peaking much higher than we previously thought. But June’s rise in prices did little to confirm fears that elevated inflation will become a persistent problem.
What you will learn:
- Comments by two MPC members suggest that the odds of the committee tightening policy earlier than expected have risen. And a strong performance from labour market indicators in June errs in the same direction.
- Economic indicators have had a habit of surprising to the upside in recent months. And while this has been a pleasing development in the case of, say, retail sales, an unexpectedly big jump in inflation in June was a less welcome eye-opener.
- The annual CPI measure rose to 2.5% from 2.1% in May. June’s reading compared with a recent low of only 0.2% last August and was the highest outturn since August 2018.
Tags:
Related Services
Post
Why tariffs won’t strangle Eurozone consumer spending
We think the damage from US tariffs on Eurozone consumer spending will be relatively mild. This is crucial for the Eurozone economic outlook, as the gradual rebound in private consumption is the only growth engine at present.
Find Out More
Post
Eurozone’s bund yields and the term premium to remain elevated
We expect 10-year bund yields to increase towards 2.8% by late 2026, as the term premium remains around 1.1% and the risk-neutral yield climbs above 1.7% over the next few quarters.
Find Out More