Halister News

(Bloomberg) -- U.K. Sept. CPI y/y is expected to rise to the highest level since 2014 as oil and food price base effects ebb and as the pound’s drop since the U.K. voted to leave the EU feeds into the data.

• U.K. Sept CPI est. 0.9% y/y vs prior 0.6% (the majority of forecasts are in the range of 0.7% to 1.3%); core CPI est. 1.4% y/y vs prior 1.3%
• The BOE said in its August Inflation Report it expected inflation to rise to close to 1% in September
• The decline in the pound in recent weeks is likely to inject more inflationary pressure and cause the average rate of inflation to exceed the Bank of England’s target in 2017, BI economist Dan Hanson writes
• Commerzbank analyst Esther Reichelt says attention today will be on how quickly GBP’s losses will be reflected in inflation data but says a surprisingly high reading won’t have notable effects on monetary policy and therefore on sterling
• The impact of the CPI release on GBP will depend on whether evidence of accelerating inflation is seen as a sign of growing stagflation threat that could exacerbate a potential BOP crisis, Credit Agricole analysts including Valentin Marinov say
  • If jobs data and retails data this week don’t show a significant deterioration, investors may focus on the diminishing prospects for BOE easing in November rather than the threat of stagflation - which could help GBP stabilize some more above recent lows
• NOTE: The BOE is willing to tolerate a bit of overshoot in inflation over the course of the next few years, BOE Governor Carney said Dec 14