Week Ahead 15 May

Subscribe to Campaigning blog feeds

Published

This week all eyes will be on CPI and wage inflation.

Inflation continues its ascendance

CPI inflation came in at 2.3% in the year to March after it overshoot the Bank of England's 2% target in February. Rising food and clothing prices were the main culprits behind the inflationary pressures, but those were largely offset by downward contributions from air fares and motor fuels. We expect the upward trend in inflation to continue in April. This reflects the impact from the sterling depreciation as manufacturers continue to pass-through the past surge in input costs into higher consumer prices. Moreover, upward pressures on inflation are likely to be heightened this month by the volatile contribution from airfares due to the timing of Easter school holidays. This should be slightly offset by a negative contribution from the energy component of inflation as oil prices fell back below 50$ a barrel in April amid oversupply jitters while they increased the same month a year ago.

All eyes on wage inflation

Labour market statistics are due to be released on Wednesday. While the unemployment rate continued to trend downward in recent month, real wage growth has so far disappointed leaving the UK labour market puzzle unresolved. Moreover, the subdued momentum in earnings acted as a drag on consumer spending last quarter causing a slowdown in GDP growth at the start of 2017. The trend is unlikely to reverse this month.

Manufacturing pay trends

EEF Pay Bulletin covering the April major bargaining round will be out on Thursday. Average settlement has been running below the 2% mark so far this year, increasing only slightly to 1.9% from last year's 1.8% average. Yet official statistics pointed to a somewhat stronger momentum in earnings growth across manufacturing compared to the economy as a whole economy. It will be interesting to see whether the trend continues this month.  

Author

This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

Other articles from this author >
Brexit-regulation-spotlight
So what does the UK actually want from future EU-UK science and innovation collaboration?

18 Jun 2018

Does the UK want a better deal with the EU than other non-member states have ever had?

survey Thank you to our regular survey respondents :-)

Why EEF does surveys and how they help you and UK manufacturing

Read more >
Manifesto-thumb Manufacturing Manifesto 2017

Our manifesto urges a new Government to fully commit to a comprehensive industrial strategy

Read more>
Online payments are not supported by your browser. Please choose an alternative browser or make payments through the 'Other payment options' on step 3.