Dear All,
Bit of a slow news week so just a very short economic update below.
That is apart from Brexit/Conservative Leadership and I am sure you don’t need me to go into that.
One point I would make is having been in recent CBI and FDF meetings the message is that the need for no-deal planning has never been greater-even if it will not all come to a head until 31st October.
Have a good week.
Gordon Polson – Chief Executive
Federation of Bakers Ltd
Barclays Economic Update: Headline UK consumer price index (CPI) stood at 2.1% (y⁄y) and core 1.8% (y⁄y) with the headline stood in line of expected 2.2%(y⁄y) forecast. In addition, the retail price index (RPI) printed 3.0% (y⁄y). As expected, the majority of the upside news came from household utility bills consistent with the rise in the level of the office of gas and electricity markets (OFGEM) cap and from transport costs with air fares having a particularly strong contribution given the timing of Easter. These two factors alone added almost 0.4 percentage points (pp) to headline CPIH. Over twelve months, energy prices reached their strongest growth rate since 2013. There was some downside news with recreation and culture subtracting 0.14pp. This was driven by computer games, though the office for national statistics (ONS) detailed briefing stated that physical computer games were the cause rather than downloads.
The RPI-CPI basis widened to 0.9pp, up from 0.5pp in mar’19. Overall, this was similar to expected weakness in computer games prices which is again likely responsible for the upside surprise versus 0.8pp forecast. However, the Bloomberg consensus survey expected a 0.6pp RPI-CPI basis. One specific element relevant to RPI is that the fuel price data used for the apr’19 data appear to have been from a week earlier than the index day of 16th apr’19, petrol prices increased just over 1.0% from the week of 8th apr’19 to 15th apr’19, which is worth ~3 base points (bp) on RPI. CPIH use average road fuel prices for the whole month but RPI uses a single snapshot on index day.
