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UK DATA: Second hand car prices likely to add to UK Q4 Headline Inflation

UK DATA
CEEMEAData BulletBulletUKGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets
  • NEIG (non-energy industrial goods i.e. core goods) came in higher than expected again at +0.28%Y/Y (vs the BOE’s forecast of 0.01%Y/Y and up from 0.11%Y/Y in July).
  • Second hand car prices contributed +0.05ppt to headline CPI and pretty much accounted for the entire increase in NEIG this month alone.
  • An interesting factor here is that second hand car prices have been broadly stable through most of 2024 with M/M pricing seeing a maximum move of +/-0.55ppt.
  • However, this contrasts to M/M falls of on average -1.86% through H2-24. This has already seen the Y/Y print increase from -11.20% in May 2024 to -6.58%Y/Y in August 2024.
  • The only month in H2-24 that was relatively stable was September.
  • If prices remain flat through the rest of 2024, second hand car prices would have a negligible impact on the September CPI print but could contribute another roughly +0.05ppt to the change in each of October, November and December’s headline CPI.
  • This is a reasonable assumption as the average M/M changes in each of the final four months of the year between 2011-2019 (i.e. The pre-pandemic decade) was again within the +/-0.55%M/M change seen so far through this year.
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  • NEIG (non-energy industrial goods i.e. core goods) came in higher than expected again at +0.28%Y/Y (vs the BOE’s forecast of 0.01%Y/Y and up from 0.11%Y/Y in July).
  • Second hand car prices contributed +0.05ppt to headline CPI and pretty much accounted for the entire increase in NEIG this month alone.
  • An interesting factor here is that second hand car prices have been broadly stable through most of 2024 with M/M pricing seeing a maximum move of +/-0.55ppt.
  • However, this contrasts to M/M falls of on average -1.86% through H2-24. This has already seen the Y/Y print increase from -11.20% in May 2024 to -6.58%Y/Y in August 2024.
  • The only month in H2-24 that was relatively stable was September.
  • If prices remain flat through the rest of 2024, second hand car prices would have a negligible impact on the September CPI print but could contribute another roughly +0.05ppt to the change in each of October, November and December’s headline CPI.
  • This is a reasonable assumption as the average M/M changes in each of the final four months of the year between 2011-2019 (i.e. The pre-pandemic decade) was again within the +/-0.55%M/M change seen so far through this year.