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Inflation data due at 7:00GMT

UK DATA
  • Following yesterday's slightly softer-than-expected private sector wage growth, this morning will see inflation data released at 7:00GMT.
  • The November data saw a meaningful downside surprise with a relatively broad-based decline. A smaller, but similarly broad-based decline, is expected in the December inflation print.
  • The median of the previews that we have read look for a fall in headline CPI of 0.1ppt to 3.8% with core inflation 2 tenths lower at 4.9%Y/Y and services inflation 3 tenths lower at 6.0% (although the mean here is for 6.07%).
  • This would be a considerable undershoot compared to the Bank of England’s November MPR forecasts which expected headline CPI at 4.58%Y/Y and services inflation at 6.86%Y/Y. Indeed, the undershoot for both if in line with expectations would be around 0.8ppt.
  • In terms of contributing factors this month, petrol prices fell but other energy components were largely unchanged with household energy bills fixed on a quarterly basis. Used car prices and food prices are expected to decelerate further. Air fares could add some uncertainty to the data depending on their survey date.

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