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CPI Preview / Labour Market Review

  • We look ahead to tomorrow's UK CPI print and review this morning's (partial) labour market report.
  • The Bank of England’s MPR forecast headline CPI to fall to 4.76%Y/Y in October while the median from the previews that we have read looks for 4.7%Y/Y (from 6.65%Y/Y in September).
  • We summarise the views of almost 20 sellside inflation previews and 10 sellside labour market reviews.
  • The MNI Markets team still thinks that there are two-way risks to the market from the inflation print tomorrow. A higher-than-expected print could see the small probability of a near-term hike climb (but probably only if we saw services come in higher than the Bank of England forecast, not just higher than the sellside consensus).
  • A lower-than-expected print would likely mean more question marks are placed over the Bankof England’s inflation forecasts – they would immediately look too high and open up the possibility of an earlier rate cut next year (the first cut is now around 86% priced in by June 2024 with just under a 50/50 probability of a May cut). A soft print tomorrow could see an even higher probability of a May 2024 cut.
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