TD Securities analysts expect UK headline inflation to slow to 3.1% year-on-year in January, largely on base effects in food and energy, leaving core inflation at 3.2%. They see the unemployment rate steady at 5.1% with stabilising employment. Wage growth is forecast to slow, with private sector pay moving toward an inflation-target-consistent 3.25%.
Price pressures cool as jobs stabilize
“We expect inflation to slow to 3.1%y/y in Jan (BoE: 2.9%) from 3.4% y/y in Dec.”
“The main culprit for the marked improvement is base effects in food and energy components. Services and core goods inflation are likely to remain roughly unchanged at 4.4% y/y (mkt: 4.4%, BoE: 4.2%, prior: 4.5%), and 1.0% y/y, respectively. This leaves core inflation unchanged at 3.2% y/y.”
“With budget fears resolved, the labour market outlook is looking up. We expect a steady UE rate and at 5.1%, it remains at its highest since ’21, the momentum in employment change points to a stabilising labour market. Elsewhere, we see wage growth slowing across all measures, with private sector wage growth dropping to near the inflation target-consistent level of 3.25%.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/gbp-inflation-easing-and-labour-market-stabilizing-td-securities-202602161329
