The pickup in CPI inflation still yet to come
Inflation data for October will be released on Tuesday. Inflation has been drifting up in the months following the EU referendum, coming in at 1.0% in the year to September. The change mainly reflected the recovery of oil prices from their low levels a year ago. However, the depreciation in Sterling following the Brexit vote is not yet passed through into higher consumer prices. Indeed, the pickup in manufacturers' output prices has been so far moderate compared to the jump in input prices, suggesting the plunge in Sterling is currently affecting manufacturers' margins. As EEF surveys suggest, the fall in exchange rate is likely to be passed through into higher CPI inflation by the end of the year. Therefore, we expect October inflation to print unchanged from September.
Resilience on the job market
On Wednesday, the ONS is releasing labour market data. While we expect little change in the unemployment rate, we will be keeping an eye on the trend in earnings. As a matter of fact, EEF pay survey results suggest the share of pay freezes is growing in the recent months, likely to be driven by heightened uncertainty. In addition, the ONS will also release the Annual Survey of Hours and Earnings (ASHE) which we will be watching very closely.