June inflation figures, PwC comments

Jul 17, 2019

Mike Jakeman, senior economist at PwC, comments on the latest inflation figures:

"For the second consecutive month, consumer price inflation was exactly on the Bank of England's target of 2% year on year. Relative to May, there were slightly larger contributions to inflation from food and alcohol and slightly smaller contributions from transport and housing. 

Stable inflation means that nominal wage growth feeding in from the tight labour market will translate into improvements in the standard of living for the economy's workers; nominal wage growth hit a new, post-crisis peak of 3.6% year on year in May. 

We remain of the view that the Bank will keep interest rates on hold over the next few months until greater clarity emerges on the future direction of Brexit. With inflation bang on target, there is no immediate need for policy to be adjusted, and the central bank is likely to keep its powder dry. On the assumption that a Brexit deal is agreed, the next move on interest rates is likely to be upward, but the timing of this is almost entirely dependent on Brexit developments."

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