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Analysts at Nomura point out that the BoE in its August Inflation Report expected CPI inflation to rise to 2.6% in July and Nomura’s forecast is modestly lower at 2.5% and they see RPI inflation static at 3.4%.

Key Quotes

“Lower petrol prices during the month and a fading upward effect from past falls in sterling are expected to push inflation back to target by the end of the year, but recent announcements of rising utility bills could yet modestly delay this.”

Producer prices: The PMI output price balance edged up in July, while the CBI’s measure remained static (albeit well above its average over the past twenty years). We forecast another 0.2% monthly rise in core output prices because of these surveys. Headline output prices may be weaker due to petrol and food prices. As for input prices, a fall in oil prices during July looks likely to be broadly offset by the positive impact of lower sterling.”