• U.k. headline inflation likely to have accelerated marginally in June

    Source: FxWire Pro - Commentary / 17 Jul 2018 18:48:58   America/New_York

    U.K. headline inflation likely to have accelerated marginally in June. In the prior month, consumer price inflation had continued its return toward the Bank of England’s 2 percent target in recent months after surpassing 3 percent at the end of 2017. As price pressures continued to retreat and real income growth slowly returns, consumer spending is expected to rebound as well.

    “We may be starting to see evidence of this shift, as retail sales beat consensus estimates and rose 1.3 percent in May month over month, while real wages should also continue their gradual upward trend”, noted Wells Fargo in a research report.

    The consumer price index is expected to have risen to 2.5 percent in June. After staying on hold in May due to weaker-than-anticipated data for first quarter, the Bank of England is likely to hike rates by 25 basis points during its August meeting, stated Wells Fargo. Even if inflation has slowed and Brexit negotiations continue to be a concern, the labor market continues to be tight, and consumer spending looks poised to recover. These factors are expected to underpin stronger GDP growth and gradual policy normalization in the quarters ahead.

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