Inflation data in Europe points to some kind of stabilization
(Kitco News) - Inflation data in Europe has flatlined slightly and this couldkeep some of the pressure at bay for the ECB and BoE. Many analysts havestarted to pice in rate hikes for the BoE as Bank's governor, AndrewBailey, gave his strongest hint yet that the Bank rate is set to rise from0.1%, where it has sat since March last year. He said that he and hiscolleagues on the monetary policy committee (MPC) would "have to act"in response to surging inflation.
In this latest report, the ONS report said the largest upwardcontribution to the September 2021 CPIH 12-month inflation rate came fromtransport (0.91 percentage points) with further large upward contributions fromhousing and household services (0.69 percentage points), restaurants and hotels(0.34 percentage points), and recreation and culture (0.31 percentage points).
Lloyds Bank analysts note "It will be a temporary respitefrom the march up to and potentially beyond 4% in the coming months. Theincrease in the energy price cap will pull inflation higher in October, with afurther significant rise likely next April as a result of soaring wholesale gasprices. That means that inflation seems set to remain around 4% into the secondquarter of next year."
In the Eurozone, The number recorded higher than the previousmonths reading and this could put slightly more pressure on the ECB. Thecurrent party line is that the higher inflation rate is transitory and thingsshould ease once energy prices move lower and the developing nation recoverfurther from the pandemic. The highest contribution to the annual euro areainflation rate came from energy (+1.63 percentage points, pp), followed byservices (+0.72 pp), non-energy industrial goods (+0.57 pp), and food, alcohol& tobacco (+0.44 pp) for the month of September.
U.K.CPI (YoY) (Sep) 3.1% vs exp 3.2% previous 3.2%
EUCPI (YoY) (Sep) 3.4% vsexp 3.4% previous 3.0%
By Rajan DhallFor Kitco News
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rdhall@kitco.comwww.kitco.com