Archive

January 21, 2026
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UK: Inflationary Bump On Slow Descent

  • UK inflation’s rebound reversed much of the recent undershoot, partly because of airfares, and despite the early index date. Seasonal payback will weigh in January.
  • There is little headline news for the BoE since November, while underlying inflation is too strong, supported by the fundamental pressure from excessive wage growth.
  • Our forecast continues to trend above the consensus through the year, which could encourage the MPC to keep rolling back its assumed rate cut, then never deliver it.

By Philip Rush

January 20, 2026
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UK: LFS Fades Extremes

  • Some of the support offered to both hawkish and dovish narratives faded in the latest labour market data, but this won’t break the case for any camp on the MPC.
  • The unemployment rate held steady for the first time since July. Employment isn’t keeping up with the surging labour force, including students not finding flexible work.
  • Redundancies retraced lower, and wage growth has slowed, but the fall in private pay is probably exaggerated by reclassification to the public sector. We still see no more cuts.

By Philip Rush

January 19, 2026
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EA: Food Prices Take Another Bite

  • EA inflation printed lower than the flash again at 1.94%, also because of food prices, but the 1.6bp nibble out of the headline rate still isn’t fundamentally significant.
  • Median inflation remains stuck below the target, offsetting the hawkish signal from other underlying statistical measures that better reflect the resilience of wage growth.
  • The ECB can remain comfortable with its “good place” assessment until it sees more evidence of inflation persistence stoking the headline. We still see no more ECB cuts.

By Philip Rush

January 16, 2026
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HEW: Steady Start To 2026

  • UK GDP data set Q4 up to match Q3, while monthly US inflation held in December precisely where it was before the shutdown noisily disrupted the dataflow.
  • The case for easing remains thin, and there isn’t much scope to change that before the next decisions. The BOK delivered the year’s first policy news by cutting its easing bias.
  • Next week’s UK inflation data will be dampened by prices being sampled too early for Christmas surge pricing. It's broadly a busy week for UK and Euro area data.

By Philip Rush

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