UK: Focus on consumer and producer prices data today – Nomura

Analysts at Nomura suggest that for the UK markets, the focus will be on the release of August CPI and PPI data to gauge the overall strength of the economy.

Key Quotes

“We expect a small fall in inflation from 2.5% to 2.4% in August. This would be the same as the BoE’s estimate, though the MPC had expected inflation to rise to 2.6% in July which would have implied a 0.2pp fall (rather than a 0.1pp fall based on July’s actual outturn). RPI surprised on the downside in July on a narrowing of the RPI-CPI wedge. We assume that a partial reversal of this narrowing in August will raise RPI inflation to 3.3%, from 3.2%.”

“Producer prices, Aug: Input prices look set to rise modestly due to the inflationary effect of a fall in GBP in August (down over 2% vs. USD and 1% vs. EUR) being only partially offset by a decline in commodity prices. The combination of still-elevated output price readings in the surveys and higher petrol prices will, we believe, push headline output prices up by 0.3% during the month (0.2% core).”