Pantheon Macroeconomics

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U.K. Publications

Below is a list of our U.K. Publications for the last 6 months. If you are looking for reports older than 6 months please email info@pantheonmacro.com, or contact your account rep

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cpi inflation

12 Jan 2023 UK Monitor CPI Inflation Likely Undershot the MPC's Forecast Again in December

  • CPI inflation likely fell to 10.3% in December, from 10.7% in November, a hefty 0.6pp below the MPC’s forecast.
  • Motor fuel prices plunged in December, while flash Eurozone data point to a further slowing in food price rises.
  • Evidence is mixed on core goods price momentum, but the usual surge in airfares won’t lift the services CPI much.

Samuel Tombs (UK Economist)U.K.

15 Dec 2022 UK Monitor November's Fall in CPI Inflation Marks the Start of a Sharp Decline

  • November's month-to-month rise in the core CPI was the smallest, adjusted for seasonality, for 11 months.
  • This isn't a fluke; recent falls in shipping costs and commodity prices point to a sharp fall in goods inflation.
  • Services inflation is a few months from peaking, but it will fall quickly in 2023 too, as wage growth slows.

Samuel Tombs (UK Economist)U.K.

2 Dec 2022 UK Monitor Price and Wage Data are Aligning for a Smaller MPC Rate Hike this Month

The slowdown in the pace of core price rises in the Eurozone in November is a good omen for the U.K.

Inflation expectations among households and businesses are falling, now that a recession is taking hold.

Manufacturers’ and retailers’ excess inventory reinforces the case for expecting goods inflation to drop.

Samuel Tombs (UK Economist)U.K.

17 Nov 2022 UK Monitor The Pace of Core Price Rises is Yet to Slow, but Better News is Coming

  • Continued momentum in core price rises was partly to blame for the upside inflation surprise in October.
  • The recent fall in shipping costs and slowing in producer price rises, however, points to a better trend soon.
  • Recessions reliably crush domestically-generated inflation; we still see a sub-2% headline rate in 2024.

Samuel Tombs (UK Economist)U.K.

15 Nov 2022 UK Monitor Brace for an Above-Consensus CPI Inflation Print for October

  • We look for an above-consensus jump in CPI inflation to 10.9% in October, from 10.2% in September.
  • Food prices continued to rise quickly and energy prices soared; core CPI inflation likely remained high too.
  • The BRC’s non-food shop prices index leapt; services inflation likely was supported by education and rents.

Samuel Tombs (UK Economist)U.K.

7 Nov 2022 UK Monitor Forecast Review, Same Dismal Outlook, but a Different Mix of Drivers

  • The U-turn in the direction of fiscal policy has offset the better news on the outlook for borrowing costs.
  • Plausible assumptions suggest Autumn Statement measures will inflict a 0.3% blow to GDP in 2023/24.
  • A halving of energy price support for households in April would raise the path for CPI inflation by about 2.0pp.

Samuel Tombs (UK Economist)U.K.

4 Nov 2022 UK Monitor The End of the MPC's Rate Hiking Cycle is Coming into View

  • The MPC’s forecasts suggest it needs to raise Bank Rate only by a further 50bp to hit the 2% inflation target.
  • The required tightening could be even smaller, depending on the size and timing of upcoming fiscal measures.
  • The MPC, however, still is nervous about upside inflation risks, so we still expect Bank Rate to rise to 4.0%.

Samuel Tombs (UK Economist)U.K.

27 Oct 2022 UK Monitor The MPC will Jawbone Rate Expectations Down Next Week

  • We expect the MPC to hike Bank Rate by 75bp next week, but to signal smaller hikes at future meetings.
  • On the face of it, its new forecast for inflation will endorse the path for Bank Rate expected by markets...
  • ...But it won’t incorporate the upcoming fiscal tightening; expect the MPC to emphasise the downside risks.

Samuel Tombs (UK Economist)U.K.

20 Oct 2022 UK Monitor Emerging Spare Capacity will Eventually Crush Core Inflation

  • September’s data showed no let up in the rate of core price rises; the MPC will continue to hike rates quickly.
  • Core CPI inflation, however, will ease soon; firms have too much stock, and demand is about to plunge.
  • The outlook for energy CPI inflation is unclear again, but rising unemployment will let the MPC focus on the core.

Samuel Tombs (UK Economist)U.K.

19 Oct 2022 UK Monitor Scrapping the Energy Price Guarantee Would Transform the Inflation Outlook

  • We’ll need to raise our forecast for CPI inflation in Q2 2023 by 5pp, if Ofgem’s unsubsidised price cap returns.
  • One option for the government is to maintain grants for low income households; these wouldn’t lower the CPI.
  • The MPC will worry more about demand than inflation expectations; unemployment will have risen by April.

Samuel Tombs (UK Economist)U.K.

28 Sept 2022 UK Monitor Surveys Point to a Small Drop in GDP in Q3, but this is Just the Start

  • PMI and confidence data for September suggest GDP edged down for a second consecutive quarter in Q3.
  • The downturn will gather momentum, as borrowing costs for households and businesses soar.
  • We now look for a 1.5% year-over-year decline in GDP in 2023, and CPI inflation not to return to 2% until 2025.

Samuel Tombs (UK Economist)U.K.

27 Sept 2022 UK Monitor Will the MPC Pick Prolonged High Inflation or a Mortgage Crisis

  • A recession now is all but inevitable; the key questionis how the pain will be distributed.
  • Hiking Bank Rate to 6% would crush domestically-generated inflation; mortgage defaults would soar.
  • Hiking more slowly would depress sterling and boost imported inflation, but is the lesser evil for the MPC.

Samuel Tombs (UK Economist)U.K.

26 Sept 2022 UK Monitor Mini-Budget Measures Won't Revitalise the Economy Next Year

  • Tax cuts which disproportionately benefit the top 1% of earners will do little to boost demand.
  • Most households are worse off, because the associated depreciation of sterling will raise the price level by 1.5%.
  • Mr. Kwarteng likely will impose tough spending limits in the Budget, to try to reverse the jump in gilt yields. 

Samuel Tombs (UK Economist)U.K.

23 Sept 2022 UK Monitor MPC Likely to Stick to Another 50bp Hike in November, Despite Tax Cuts

  • The improved near-term outlook for CPI inflation has left the MPC less anxious about second-round effects.
  • The MPC is awaiting more details on fiscal policy; a 75bp hike in November can't be ruled out...
  • ...But the proposed tax cuts will do little to boost GDP, and spending might be cut; we still expect a 50bp hike.

Samuel Tombs (UK Economist)U.K.

22 Sept 2022 UK Monitor Gilt Issuance to Hit Eye-Watering Levels Next Year

  • Public borrowing has tracked the OBR's forecast this year, but government spending now will soar.
  • Loans to energy suppliers, to limit energy price rises, will boost the cash requirement, but not borrowing.
  • We look for a gross financing requirement of about £325B in 2023/24, but the outlook is very uncertain.

Samuel Tombs (UK Economist)U.K.

21 Sept 2022 UK Monitor Mortgage Refinancing Set to Deliver a 1pp hit to Disposable Incomes in 2023

  • The effective interest rate for all mortgages has risen only slowly to date, but now looks set to soar...
  • ...As a rising number of borrowers refinance, and as lenders respond to the further jump in risk-free rates.
  • Expect a 1pp disposable income hit in 2023 if Bank Rate tops 4%, or a 0.7pp drag if Bank Rate tracks our forecast.

Samuel Tombs (UK Economist)U.K.

16 Sept 2022 UK Monitor The Improved Inflation Outlook Implies the MPC will Stick to a 50bp Hike

  • We think the MPC will raise Bank Rate by 50bp next week, despite other central banks rushing ahead...
  • ...Q3 GDP is set to undershoot the MPC’s latest forecast, while the inflation outlook has improved greatly.
  • Proposed tax cuts are too small to move the inflation needle, and likely will be partly funded by spending cuts.

Samuel Tombs (UK Economist)U.K.

15 Sept 2022 UK Monitor Will the Better News on CPI Inflation Keep Coming?

  • The month-to-month change in the August core CPI exceeded its seasonal norm by the least this year.
  • The recent decline in commodity prices suggests core CPI inflation will fall sharply next year.
  • Services inflation will be stickier, but the current support from energy price rises and VAT changes will fade.

Samuel Tombs (UK Economist)U.K.

14 Sept 2022 UK Monitor Wage Growth Remains too High for the MPC, But that will Change in 2023

  • Employment has stopped rising, but labour market slack hasn't accumulated, due to increasing inactivity.
  • We expect labour demand to remain flat but the workforce to grow, as immigration and participation recover.
  • For now, wage growth is too hot for the MPC, but building slack and falling CPI inflation will slow it in 2023.

Samuel Tombs (UK Economist)U.K.

12 Sept 2022 UK Monitor Labour Market and Retail Sales Data to Persuade the MPC to be Cautious

  • Business surveys and vacancy data point to another negligible rise in payroll employees in August.
  • Wage growth likely remained slightly too strong for the MPC, but probably didn't gain more momentum.
  • BRC data point to a below-consensus fall in retail sales in August; the MPC won't up the hiking pace.

Samuel Tombs (UK Economist)U.K.

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