The U.K.’s August inflation rate is expected to have been impacted by
non-core and core factors, said Societe Generale in a research note. In the
previous month, core inflation decelerated to 1.3 percent year-on-year; however,
the gradual influence of the recent weakening of the pound is expected to start
being felt in non-energy industrial goods prices that should have pushed up the
rate to 1.4 percent year-on-year in August, according to Societe
Generale.
In the non-core, there is increasing and solid evidence of the
exchange rate impact pushing up prices of food imports. However, it is
surprisingly that it has not yet being expressed in consumer food prices, but it
is uncertain if it can last much longer. Therefore, food price deflation is
likely to have eased a tad to -2.3 percent year-on-year from -2.6 percent
year-on-year.
In August, prices of petrol declined 2.2 percent in
sequential terms; however, on a year-on-year basis, prices dropped 3.3 percent.
This is expected to contribute positively to inflation as well. Overall, U.K.’s
consumer price inflation is likely to have accelerated to 0.7 percent
year-on-year from 0.6 percent, added Societe Generale.