This week is likely to be less eventful than the last, particularly in relation to politics and monetary policy. In a week that was light on the data front, the appointment of the UK’s new Prime Minister Theresa May dominated attention. Also, the Bank of England surprised many economists by indicating it is willing to wait for more information about the potential negative economic impact of the referendum result before deciding whether/when to ease monetary policy.
Official reports on the labour market, consumer prices and retail sales are due this week but they’ll not provide reliable guidance about the impact of the vote. The labour market data covers the three months to May, that is, the period leading up to the referendum. While the consumer prices and retail sales data is for June, the result of the vote was only known in the last week of that month.
In relation to consumer prices, the annual inflation rate rose 0.3% in April for the second consecutive month. Yet inflation is likely to pick up sharply in the coming months as the significant depreciation of Sterling since the referendum result pushes up the cost of imports.
EEF has conducted a survey of UK manufacturers to gauge their response to the UK voting to leave the EU. We’ll be blogging the results on Tuesday. Also, later in the week we’ll blog about how our economic and manufacturing forecasts have been revised in the wake of the referendum.