Week Ahead 17 October | EEF

Week Ahead 17 October

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This week, we will keep an eye on inflation and labour market statistics.


Inflation likely to hike in September

On Tuesday, the ONS will release inflation statistics for September. As we highlighted previously, input costs have been soaring following the sharp depreciation in Sterling in the immediate aftermath of the EU referendum - up by 3.3% in July and 7.6% in August. Yet the pass-through into higher output prices has been relatively limited so far, with output prices increasing by only 0.3% in July and 0.8% in August. The gap reflects that manufacturers are facing downward pressures on profit margins in the short term. However, the gap is likely to start narrowing in September as manufacturers pass through part of the increase in production costs to their clients in the supply chain. Therefore, CPI inflation is likely to spike in September as the pass-through into consumer prices starts to materialize.

Job market

Labour market data will be released on Wednesday by the ONS. The job market has shown resilience in the immediate aftermath of the referendum, with the ILO unemployment rate unchanged at 4.9% in the three months to July - its lowest level in ten years. This trend is likely to continue over the short term.



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