CPI inflation likely soared to 9.2% in April, from 7.0% in March, largely due to the jump in the energy price cap.
BRC data are consistent with another large rise in core goods prices, while services prices likely shot up too...
...In response to the hospitality VAT hike, big increases in phone contract prices, and an Easter boost to airfares.
Samuel Tombs (UK Economist)U.K.
The near-term outlook for households' real disposable income looks bleak; we still expect GDP to drop in Q2.
A recession, however, isn't our base case; people have ample scope to draw on savings and to borrow more.
We now Bank Rate to top out at 1.25% this year, not 1.00%, but still think markets have lost the plot.
Samuel Tombs (UK Economist)U.K.
We look for two further 25bp increases in Bank Rate this year, not one, after March's jump in CPI inflation.
CPI inflation looks set to peak at about 9% in April and remain above 8% until the very end of this year.
But energy and core goods inflation will plunge next year; the MPC needn't be as active as markets expect.
Samuel Tombs (UK Economist)U.K.
GDP rose by 0.1% m/m in February, despite a rebound in private sector activity, due to falling Covid spending.
Healthcare output will fall further, while the momentum in the private sector will slow as real incomes decline.
We look for a 0.4% quarter-on-quarter drop in GDP in Q2; the extra public holiday will add to these headwinds.
Samuel Tombs (UK Economist)U.K.
- February's CPI inflation data won't panic the MPC, services inflation merely matched its long-run average.
- The further surge in oil prices and producer prices suggests that CPI inflation will rise to 8.6% in April...
- ...and will rise to a similar rate in October, after easing in Q3; the MPC, however, will worry more about demand.
Samuel Tombs (UK Economist)U.K.
- We expect the OBR to revise up its "pre-measures"2022/23 public borrowing forecast by £3B to £86B...
- ...But Mr. Sunak's headroom in meeting his three-year ahead rules will not decline; inflation will ease in time.
- The Chancellor, however, will want to preserve this headroom to cut taxes just before the next election.
Samuel Tombs (UK Economist)U.K.
- January's 5.5% rate of CPI inflation only just exceeded the MPC's 5.4% forecast; the surprise was all in goods.
- Services inflation is only slightly above its long-run average; the MPC needn't panic.
- The headline rate likely will peak at 7.7% in April, but then fall swiftly, potentially undershooting the target in 2023.
Samuel Tombs (UK Economist)U.K.
- We think CPI inflation rose by 0.1pp to 5.5% in January, but annual weight changes increase the uncertainty.
- Core goods prices surely leapt; data from the Eurozone and the U.K.'s BRC point to a very large increase.
- A base effect likely depressed accommodation services inflation, but wider services inflation is trending up.
Samuel Tombs and Gabriella DickensU.K.
- Public borrowing in 2021/22 looks set to come in at about £170B, £13B below the OBR's Budget forecast.
- The hit from higher interest payments will exceed the windfall from higher-than-forecast GDP in 2022/23...
- ...But Mr. Sunak built some wriggle room into his plans; he can intervene on energy prices and meet his targets.
Samuel Tombs and Gabriella DickensU.K.
- We are bringing forward our forecast for the next two increases in Bank Rate, following December's CPI data.
- While food, energy and goods prices are mainly to blame for high inflation, services inflation has risen too.
- CPI inflation, however, will fall sharply in H2 and should be below target in 2023, curtailing the hiking cycle.
Samuel Tombs (UK Economist)U.K.
- The default tariff energy price cap looks set to rise by 47% in April, pushing up CPI inflation to 6.2%.
- The rise will be larger, if suppliers are immediately compensated for acquiring failed competitors' customers.
- Removing VAT would limit the inflation peak to 6.0%; a supplier loan scheme could have a bigger impact.
Samuel Tombs (UK Economist)U.K.
November's 5.1% CPI inflation rate was 0.6pp above the forecast made by the MPC only last month...
...But high inflation is due to surging energy and goods prices; underlying services inflation remains subdued.
We expect the headline rate to peak at 6.0% in April, but then to fall sharply, slipping below-target in 2023.
Samuel Tombs and Gabriella DickensU.K.
- CPI inflation likely rose to 4.8% in November—0.3pp above the MPC's forecast—from 4.2% in October.
- Used car prices still are rising rapidly, while supermar- kets are passing on higher food prices to shoppers.
- Tobacco prices were lifted by a duty hike, while cloth- ing CPI inflation likely was boosted by a base effect.
Samuel Tombs (UK Economist)U.K.
- The MPC would ease monetary policy again in the unlikely event that another lockdown is imposed.
- Fiscal policy would be less supportive than in previous lockdowns; new curbs would dampen inflation.
- Negative rates are in the toolkit and are preferred to more QE; Bank Rate likely would be cut to -0.25%.
Samuel Tombs (UK Economist)U.K.
- October's 4.2% rate of CPI inflation was well above the MPC's 3.9% forecast; such a large error margin is rare.
- The upside surprise came from the core, and will carry over to future months; April's peak looks set to top 5%.
- Mean-reversion in energy and goods prices, however, should ensure that CPI inflation dips below 2% in 2023.
Samuel Tombs (UK Economist)U.K.
- Energy prices likely were the key driver of higher CPI inflation in October, but the core rate probably rose too.
- Used car prices rocketed again, while data from the BRC point to a chunky rise in clothing prices.
- Hospitality firms probably raised prices in response to the VAT hike; the boost is uncertain but likely large.
Samuel Tombs (UK Economist)U.K.
- The near-term outlook for GDP has worsened, but 2022 looks a little brighter in the wake of the Budget.
- Higher energy prices mean we have revised up our forecast for CPI inflation in 2022 to 3.6%, from 3.4%.
- We now expect two rate hikes, not one, in the next 12 months, but still anticipate no change this week.
Samuel Tombs (UK Economist)U.K.
- The MPC's preferred measure of underlying services inflation merely matched its 2010s average in September.
- CPI inflation is on course to rise to a peak of about 4.8% in April, from 3.1% in September...
- ...But the rise will be driven largely by higher energy prices; core inflation should remain well-behaved.
Samuel Tombs (UK Economist)U.K.
