Instant view: Flat on the month. Much below expectations. Supports the view that the BoE is in no hurry to hike. GBP negative short term.
CPI was flat on the month in September and hence much weaker than expected. Consensus estimates had CPI increasing by 0.2% m/m, which would already have been significantly below the 0.4% m/m in August. In term of annual inflation, today’s numbers showed a drop to 1.2% y/y in September, down from 1.5% y/y in August.
The main contributions to the downside came from transportation and food. Services prices in general dropped 0.5% m/m while goods prices increased 0.5% m/m.
Today’s low inflation numbers support our view that the Bank of England is not in a hurry to hike rates. Our forecast is still a first rate hike in Q2 next year.
Today’s numbers should be GBP negative and bond positive.
Details, CPI Inflation September:
CPI, m/m: 0.0% (Nordea 0.4%%; consensus 0.2%; prior 0.4%)
CPI, y/y: 1.2% (Nordea 1.6%; consensus 1.4%; prior 1.5%)
Nordea