Investment Clock insights

Carney’s inflation letter has been avoided


Ian Kernohan 

14 November 2017

Consumer Price Index (CPI) inflation was 3.0% in October, just below the Bank of England’s expectations and avoiding the need for Mr. Carney to write a letter to the Chancellor.  While the inflation rate for food and drink continued to increase, this was offset by falling motor fuel and furniture prices, along with owner occupiers’ housing costs.  
With producer price inflation already easing, we think the impact of sterling devaluation is close to its peak and CPI should fall next year, reducing the squeeze on real household incomes.

Consumer Price Index (CPI) inflation was 3.0% in October, just below the Bank of England’s expectations and avoiding the need for Mr. Carney to write a letter to the Chancellor.  While the inflation rate for food and drink continued to increase, this was offset by falling motor fuel and furniture prices, along with owner occupiers’ housing costs.  

With producer price inflation already easing, we think the impact of sterling devaluation is close to its peak and CPI should fall next year, reducing the squeeze on real household incomes.

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.