UK: Inflation on the march – RBC CM

Research Team at RBC Capital Markets, suggests that the UK labour market report this week (Wed.) isn’t likely to be too noteworthy in terms of market sensitivity, with average earnings growth expected to hold around 2% 3m/y and the unemployment rate anticipated to be unchanged at 4.9%.

Key Quotes

“In conjunction with the outlook for inflation rising on the back of the depreciation in GBP, the implication of soft wage growth and rising consumer prices is a purchasing power squeeze and a hit to real terms spending growth. The rise in inflation is expected to see CPI increase to 0.8% y/y in September (Tue.) from 0.6% y/y last month. We still see CPI inflation continuing to rise through Q4 and up to the 2% target early in 2017.”

 

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