U.K. inflation likely to have accelerated in April, core rate to have risen 2.2 pct – Wells Fargo

The U.K. is set to release its April inflation data next month. According to consensus expectations, inflation is likely to have risen 0.4 percent sequentially and 2.6 percent year-on-year. The headline inflation rate in the U.K. stands at 2.3 percent and has trended upwards since the beginning of last year.

The sharp decline in the British pound after the Brexit referendum in June 2016 has appeared to have inflation implications. While the recovery in energy prices has aided in underpinning price pressures, core CPI, which excludes energy effects, has accelerated too.

April’s core rate is likely to have accelerated 2.2 percent after rising to 1.8 percent in March, noted Wells Fargo in a research report. The rise in prices has erased gains in real income that has in turn been a drag on consumer spending. But stagnation in average hour earnings growth implies that the core pace of inflation is unlikely to continue to accelerate, stated Wells Fargo.