Headline year-on-year inflation figure recorded at 6.7%, Bank of England will see this as disappointed despite being slightly stronger than expected.
New figures show a chink in strong labour market which is encouraging and markets unlikely to react, with no significant change to UK consumers at this point.
Market expert William Marsters of investment platform Saxo said the Bank of England will see this data as ‘disappointing’ and halving inflation ‘this year won’t be easy’.
Marsters said, “The headline year-on-year (yoy) figure printed at 6.7%, inline with last month but above the expected 6.6% – with the slightly stronger than expected print mainly due to services inflation.
“The Bank of England will see this data as disappointing, but yesterday’s softer earnings numbers should temper that disappointment.
“Wages have been a thorn in the side of the economy as it is often one of the last things to be impacted by monetary tightening. Yesterday’s numbers show a chink in the strong Labour market which is encouraging in terms of reducing inflation on the basis higher unemployment can slow down inflation and rate increases
“The margins are thin at this point, today’s numbers aren’t a drastic miss, and expectations weren’t far from the previous months anyway. The yoy numbers aren’t going up, so markets likely won’t overreact.
“As such, there shouldn’t be a significant change for UK consumers at this point. Getting back to the 2% inflation target was never going to happen overnight, and today’s CPI numbers may be a reminder to the government that halving inflation this year will not be easy.”