{"id":2788,"date":"2009-05-11T15:04:34","date_gmt":"2009-05-11T15:04:34","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2788"},"modified":"2025-03-27T15:48:49","modified_gmt":"2025-03-27T15:48:49","slug":"inflation-prospects-improving-as-sterling-weakness-abates","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2788","title":{"rendered":"Inflation prospects improving as sterling weakness abates"},"content":{"rendered":"<p>Earlier posts argued that the MPC and consensus were underestimating the inflationary impact of exchange rate weakness (e.g. <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/12\/18\/sterling-slide-no-economic-panacea.html\">here<\/a>). Recent figures have indeed been worse than expected: annual CPI inflation averaged 3.0% in the first quarter versus a 2.7% projection in the February <em>Inflation Report<\/em>. The MPC will <a href=\"http:\/\/www.telegraph.co.uk\/finance\/economics\/5300792\/Bank-of-England-recovery-to-be-V-shaped.html\">reportedly<\/a> revise up its forecasts in the May <em>Report<\/em> released on Wednesday.<\/p>\n<p>However, stability in sterling&#8217;s effective index since late 2008 &ndash; if sustained &ndash; promises a reduction in imported inflationary pressures later this year. The annual increase in manufactured import prices may already have peaked at 16% in December (March figures are due tomorrow) &ndash; see first chart. Base effects suggest a big slowdown in late 2009 barring another sterling accident.<\/p>\n<p>April CPI numbers next week will benefit from cuts in household energy tariffs. In addition, the British Retail Consortium&#8217;s food and non-food price indices registered lower rates of change in April than March and correlate reasonably closely with the corresponding CPI goods components &ndash; second chart. Slower food price gains were also suggested by April producer input cost numbers &ndash; third chart.<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-import-prices-120509.jpg?__SQUARESPACE_CACHEVERSION=1242113511098\" alt=\"\" \/><\/span><\/span><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-consumer-BRC-prices-120509.jpg?__SQUARESPACE_CACHEVERSION=1242113529691\" alt=\"\" \/><\/span><\/span><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-food-prices-120509.jpg?__SQUARESPACE_CACHEVERSION=1242113544035\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Earlier posts argued that the MPC and consensus were underestimating the inflationary impact of exchange rate weakness (e.g. here). Recent figures have indeed been worse than expected: annual CPI inflation averaged 3.0% in the first quarter versus a 2.7% projection in the February Inflation Report. The MPC will reportedly revise up its forecasts in the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2788","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2788","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2788"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2788\/revisions"}],"predecessor-version":[{"id":5097,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2788\/revisions\/5097"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2788"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2788"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}