Handelsbanken mener, at den britiske inflation bevæger sig mod en normalisering, omend udviklingen kan aftage i efteråret, når coronakrisens virkning begynder at bide. Forbrugerpriserne steg i juli med 1 pct. (årsrate), og den samlede inflationen lå mellem 1,5 og 1,8 pct. i 2018 og 2019 mod den langvarige tendens på 2,1 til 2,7 pct.
Inflation moves towards normalisation
• UK Inflation figures come in above expectations, normalisation beckons
• Phase one of the recovery is coming through rapidly
UK consumer prices move towards normal
The latest UK Consumer Price Indices for July 2020 rose by 1.0 percent (including housing CPIH = 1.1 percent). Inflation figures across the board have come in above consensus, which were generally below 1%.
• Phase one of the recovery is coming through rapidly
UK consumer prices move towards normal
The latest UK Consumer Price Indices for July 2020 rose by 1.0 percent (including housing CPIH = 1.1 percent). Inflation figures across the board have come in above consensus, which were generally below 1%.
CPI Inflation had been running between 1.5 and 1.8 percent for much of 2018-19. RPI figures also surged, rising by 1.6 percent last month, up from 1.1 percent in June and above forecasts of 1.3 percent. Again, the long-run rate has been between 2.1 and 2.7 percent, so this move can partially be viewed as a step towards normalisation.
These figures in part reflect a wider range of goods and services being measured as the lockdown has been eased.
The CPI details revealed that food prices were generally down, an expected seasonal effect. In contrast, oil prices rose and recreational services have seen a bit of a surge in prices.
Moreover, package holidays saw a rise, as did domestic services (restaurants) with many “staycations” putting some pressure on prices, although it is noted that many areas (such as concerts and live entertainment) remain partly, or fully, closed. The impact of the Chancellor’s “Eat Out To Help Out” may well take these figures down next month.
Recovery coming through, but BoE plans remain in place
There have been indications from OECD leading indicators that UK consumer spending is recovering reasonably rapidly, and these figures would certainly support that.
Our view remains that this is going to be a recovery in two phases, with a strong rebound from the depths of the recession (where we are now) and a more difficult and gradual phase in the autumn, when rising unemployment dampens consumer confidence. These numbers will likely not alarm the Bank of England Monetary Policy Committee, and we expect interest rates to remain unchanged and the asset purchase programme to proceed as planned.
