Aberdeen: Higher UK inflation comes as no surprise
Felix Feather, Economist at Aberdeen, comments on the UK inflation figures released this morning:
'This morning’s jump in the headline inflation rate from 2.6% to 2.9% comes as no surprise, a strong contribution from the uplift to the energy bill price cap was inevitable. And there was little sign of contagion of the energy shock to other goods and services, core inflation remained at 2.6%, while the services measure fell back a touch.
So far markets are largely undisturbed by the stronger headline, retaining an expectation for some modest tightening of Bank of England policy. Given evidence of a slowdown in underlying domestically generated inflation (as opposed to more internationally driven goods such as energy commodities) and soft labour market conditions, we see the Bank on hold for the rest of the year.'
