Paying particular attention to pay growth

The government’s decision to grant pay rises of 5-7% for some public sector workers will probably add to the persistence of inflation and, for the Bank of England, trump the recent easing in some forward-looking indicators of wages. While another upside shock to core CPI inflation can’t be ruled out, our hunch is that next Wednesday’s release of June’s CPI data will reveal that core inflation eased in line with the recent US trend.

We’ll be discussing the UK inflation, growth and policy outlooks after the June CPI release on Wednesday 19^th July. Register here to join that 20-minute online briefing.