Archive

February 14, 2024
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UK: Inflation Weighed Down in Jan-24

  • UK CPI inflation remained at 4% in January, undershooting expectations for an increase. However, this was primarily because of weighting changes to airfares and energy.
  • The median inflationary impulse was marginally above our forecast, and the RPI, which wasn’t reweighted in January, was only 0.1pp lower than we expected.
  • If sustained, these weighting changes will have an upward effect on CPI inflation later this year. So, we do not see the surprise’s reason nor cumulative effect as dovish.

By Philip Rush

February 13, 2024
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UK: Labour Market In Rude Health

  • UK unemployment confounded market expectations by falling to 3.8% from the lowered profile in the reintroduced LFS data. It is 0.5pp less than the BoE forecast for Q4.
  • Residual seasonality may unwind some of this strength in the Spring, and labour demand appears to have softened slightly despite rebounding weekly vacancies data.
  • Wage growth also exceeded expectations. Underpinned by high settlements, it may persist near 6%. Strength in pay and jobs suggests the labour market is in rude health.

By Philip Rush

February 12, 2024
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UK Politics: Bye-bye Elections

  • The Conservative right-wing’s determination to continue pressing the self-destruct button is only likely to be deepened by two more by-election defeats on 15 February, ensuring that the UK waves ‘bye-bye’ to Tory government after the upcoming general election for at least five years.

By Alastair Newton

February 08, 2024
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UK Wages Still Settling Too High

  • UK wage growth has slowed, but settlements in the critical January round are similar in 2024 to 2023. These deals prevent wage growth from slowing to target-consistent rates.
  • Employers intend to increase pay by less in 2024 than last year’s plans while still exceeding 2022’s. Actual rises are state-dependent and have exceeded past intentions.
  • We expect economic resilience to keep wage growth persistently elevated, encouraging the BoE to delay its first rate cut until Feb-25, beyond the MPC’s likely current view.

By Philip Rush

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