UK: Key economic events ahead – Nomura

Analysts at Nomura enlist the key macro events due on the cards from the UK docket today, with the key CPI and PPI figures due at 0930GMT.

Consumer prices:

“We expect CPI inflation to have fallen by two tenths in December, from 3.1% in November to 2.9% in December.

This may not be the start of a continued fall, however, with our current forecasts having inflation rising slightly in January before embarking on a trend decline thereafter back towards its target.

We see RPI inflation falling by 0.1pp in December (3.9% to 3.8%) - this fall is less than that of CPI inflation due to the RPI-CPI wedge rising 0.1pp thanks to the BoE's November rate rise, which raises the mortgage interest component of the RPI.

Our forecast of a fall in inflation in December before temporarily rising in January is consistent with anecdotal evidence showing significant discounting ahead of Christmas (note the fall in the BRC shop price index).”

Producer prices:

“The CBI and PMI output price indices moved in different directions in December - CBI up, PMI down.

What they have in common is that they are both historically high and well above their averages over the past 20 years.

As a result, we expect another 0.3% m-o-m rise in headline and also core output prices in December. The combination of higher sterling during the month and a rise in crude oil prices should keep input prices broadly static.“