September 20, 2021
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UK: energy jump into a forward roll down

  • Gas and electricity prices have jumped amid a perfect storm of supply pressures, especially in the UK, where the infrastructure has failed in storage and through fire.
  • The extreme moves concentrate this winter, causing our typically accurate model to suffer. We now implement the regulator’s full model. The peak RPI y-o-y impact now looks less to us, at 89bps, and a small cut could occur with contract rolls in Oct-22.

September 17, 2021
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UK: on holiday from retail

  • Retail sales delivered another substantial disappointment by declining for the fourth consecutive month in August. Declines remained broad-based rather than reflecting a normalisation towards services, and restaurant bookings are falling in September.
  • Post-holiday quarantine has overtaken the “pingdemic”, with more adults than ever forced into isolation (nearly a million). Further disruption is likely to return with the schools. Consumers remain gloomy about their situation and are not splurging savings.

September 16, 2021
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Inflation expectations start stretching

  • New price shocks stretch the peak and persistence of excess inflation. Although we still see this pressure as transitory, we are mindful of the risk expectations might shift. The responsiveness of inflation forwards to spot changes is most concerning.
  • Wage negotiations will be the ultimate check, albeit lagging behind expectations and our statistical measures of underlying inflation. Wages corroborate hawks in Norway, less dovish pressure in the UK and Sweden, while the Euro area remains in a low rut.