英国国家经济和社会研究所-月度CPI跟踪：7月份通货膨胀率小幅上升至2-WN8

NIESR

MonthlyCPITracker

InflationRisesSlightlyto2.2PerCentinJuly

MonicaGeorgeMichail

14August2024

“Today'ssmallriseininflationisdrivenmostlyduetothelargepricedropsingasandelectricitylast

yearfallingoutofthecalculation.Thiswillbeaconsistentfeatureoverthenextfewmonths,with

inflationhoveringaroundthe2percenttarget,beforecomingbacktotargetinearly2025.

Ontheotherhand,underlyinginflationarydynamicscontinuedtoslowwithcoreinflationat3.3per

centandservicesinflationat5.2percent.Despitethelowerfigures,theseremainelevatedandmay

leadtheBankofEnglandtoexercisesomecautionwithregardstofurtherinterestratecuts.”

MonicaGeorgeMichail

AssociateEconomist,NIESR

MonthlyCPITracker

August24-2-

Mainpoints

•Asexpected,today’sONSfiguresshowthatannualCPIinflationroseto2.2percentinJuly,

afterhittingthetargetinMayandJune.Thischangefromlastmonthreflectsupward

contributions,suchasthosefromhousingandhouseholdservices,whichwereoffsetby

downwardcontributionsfromseveralitemcategoriessuchasrestaurantsandhotels.

•Thesignificantfallinservicesinflationto5.2percentwillhavesurprisedtheBankof

Englandwhoexpectedittoremainaround5.7percent.This,alongsidethefallincore

inflationto3.3percent,isastrongsignthatunderlyinginflationdynamicsareeasing.

•Inaddition,ourmeasureoftrimmed-meaninflationmeasure(whichexcludes5percentof

thehighestandlowestpricechangestoeliminatevolatility)hasfallento1.6percent,

remainingaroundthelowestlevelsinnearlythreeyears.Thisfigurereflectslargeannual

priceincreasesinsomesectorssuchasrestaurantsandhotels,andrecreationandculture,

whicharedrivingtheheadlinerateupwards.

•Weexpectinflationtocontinuehoveringcloseto,butabove,the2percenttargetinthe

comingfewmonths,beforestabilisinginearly2025.Inflationremainingclosetotarget

levelsandencouragingdropinservicesinflationmayincreasetheprobabilityoffurtherrate

cutsfromtheBankofEnglandinSeptember.However,strongwagegrowth,coupledwith

stillhighcoreandservicesinflation,maymeantheBankcouldexercisesomecautionwith

regardstofurtherratecuts.Furthermore,thepotentialincreaseintheenergypricecapin

Octobercouldincreaseinflationarypressures.

•Movingforward,itwouldbeimportanttokeepaneyeonmonth-on-monthinflationfigures

(‘new’inflation)todeterminetowhatextentweinflationwillreboundinthecomingmonths.

•Forabreakdownofwhatinflationisandhowitiscalculated,readourblogposthere.

Figure1–CPI,coreCPIandtrimmed-meaninflation(percent)

Note:Ourmeasureoftrimmedmeaninflationexcludes5percentofthehighestandlowestpricechanges.Source:ONS,NIESR

Calculations.

NationalInstituteofEconomicandSocialResearchniesr.ac.uk

MonthlyCPITracker

August24-3-

EconomicSetting

InourlastGDPTracker,wenotedthatGDPgrewby0.9percentinthethreemonthstoMay,

higherthanpreviouslyexpected,andwasdrivenbygrowthinservices.AsnotedintheTracker,

weexpectthatmonthlyGDPwillcontinueitsmomentuminJuneandtorecord0.6percentin

thesecondquarterof2024,drivenmainlybyservicesectors.

Yesterday’sONSlabourmarketdatasuggestedthattheannualgrowthrateofaverageweekly

earnings,includingbonuses,was4.5percentinQ22024whilepaygrowthexcludingbonuses

was5.4percent.

Thesefiguresindicatethatwagegrowthremainselevatedbyhistoricalstandardsbutis

graduallysofteningafterpeakingoversummer2023(Figure2).OurWageTrackerhighlighted

thatthevacancy-to-unemploymentratiostoodat0.62inJune,comparedtoanaverageof0.52

in2015-2019andahistoricalaverageof0.42,indicatingthatwhilethelabourmarketcontinues

tosoften,itremainssomewhattightbyhistoricalstandards.

Whilewagegrowthisexpectedtoslowtoitshistoricalaverageinthemedium-termduetothis

labourmarketcooling,thecurrentpersistenceofhighwagegrowth,togetherwiththe9.8per

centriseinminimumwageinApril(forthoseaged21andover)meansthatwageinflationmay

bestickierinthenear-termthanpreviouslythought,andmayleadtheBankofEnglandtoremain

cautiousagainstanearlyratecut. 

Figure2–Averageweeklyearnings(regularpay,excludingbonuses)

Source:ONS,NIESRCalculations.

ServicessectortotalAWEannualgrowthisgraduallyslowingandhasdroppedto4.3percentin

Q22024.AsFigure3belowshows,thereseemstohavebeenashiftinservice-sectortotalAWE

growthpreandpostpandemic;theaveragegrowthrateinAWEinthissectorwas2.9percent

fromJanuary2002toFebruary2020,whilefromMarch2020onwardsthisaveragehas

NationalInstituteofEconomicandSocialResearchniesr.ac.uk

MonthlyCPITracker

August24-4-

increasedto5.6percent(evenaccountingfortheinitialcovid-relatedplummet).Giventhat

wagesintheservicessectoraccountformostofthesector’sinputcosts,itisthemaindriverof

servicesCPIinflation,whichtoday’sdatasuggestwas5.2percentinJuly,fallingfrom5.7per

centinMay.

Figure3–Totalaverageweeklyearningsgrowthintheservicessector

Source:ONS

Whileelevatedservicesinflationwillbecontributingtoinflationarypersistence,itisgoodnews

thatithassoftenedsignificantlyinrecentmonths.Ifthistrendcontinuesitmaygivemonetary

policymakersincreasedconfidencearoundcuttinginterestrates(moreonthisbelow).

InflationAnalysis

Today’sONSfiguresindicatethatannualCPIinflationincreasedabovetheBankofEngland’s

target,recording2.2percentinJuly,afterhittingthe2percenttarget.Thissmallincreasefrom

lastmonthreflectsupwardcontributionsfromhousingandhouseholdservices,inparticulargas

andelectricitypriceswhichfellbylessthantheydidlastyear.Theseweresomewhatoffsetby

downwardcontributionsfromseveralitemcategoriessuchasrestaurantsandhotels.

Thelatestdatasuggestthatannualfoodinflationfellslightlyto1.5percent,whilenegative

growthratesinenergypriceinflationhaveslowed,recording-10.9percentinJuly.

Furthermore,non-energyindustrialgoodsinflation–whichpreviouslyaveragedaround6to7

percent–hasbeensofteningconsistentlysincethesecondhalfof2023,recordinggrowthof

just0.1percentinJuly(Figure5).

NationalInstituteofEconomicandSocialResearchniesr.ac.uk

MonthlyCPITracker

August24-5-

Whileservicesinflationremainsthemaincontributortoheadlineinflation(Figure4),itsannual

growthslowedfrom5.7inJuneto5.2percentinJulywhichwouldhavepositivelysurprisedthe

BankofEnglandwhoforecastedthistoremainat5.7percent.Thishasresultedinafallincore

inflation,althoughitremainselevatedat3.3percentinJuly(Figure1).

Figure4–Contributionsofsectorstotheconsumerpriceindex(annualpercent)

Source:ONS,author’scalculations

NIESR’smeasureofunderlyinginflation(whichexcludes5percentofthehighestandlowest

pricechangestoeliminatevolatilityandseparatethesignalfromthe‘noise’)fellfrom1.7inJune

to1.6percentinJuly.Thisfigureindicatesthatlargeannualpriceincreasesinsomesectorssuch

asrestaurantsandhotels,andrecreationandculturearedrivingtheheadlinerateupwards,

whileinflationisbroadlyfallinginmostsectors.

Figure5–Inflationforelementsoftheconsumerpriceindex(annualpercent)

Source:ONS

NationalInstituteofEconomicandSocialResearchniesr.ac.uk

MonthlyCPITracker

August24-6-

MonetaryPolicyAnalysis

AmidstinflationfallingtotargetinMayandJune,theMPCdelivereditsfirstinterestratecutin

overfouryearsduringitsAugustmeeting,droppingratesby25basispointsto5.00percent.

Furthercutswillmainlydependonthepaceofslowingdowninservicesinflation,aswellas

potentialupsiderisks.Today’sfiguresshowingasignificantfallinservicesinflationto5.2per

centwillhavesurprisedtheBankofEnglandwhoexpectedittoremainaround5.7percent.This,

alongsidethefallincoreinflationto3.3percent,isastrongsignthatunderlyinginflation

dynamicsareeasing,whichmayincreasetheprobabilityoffurtherratecutsfromtheBankof

EnglandinSeptember.

Nevertheless,weexpectinflationtocontinuehoveringcloseto,butabove,the2percenttarget

inthecomingfewmonthsduetobaseeffects,beforestabilisinginearly2025(asdiscussedby

mycolleagueHuwDixon’sblog).Strongwagegrowth,coupledwithstillelevatedservices

inflation,maymeantheBankcouldexercisesomecautionwithregardstofurthercuts.In

addition,thepotentialincreaseintheenergypricecapinOctober,coupledwithpossible

geopoliticaltensions,serveasupsideriskstoinflationinthecomingmonths.

Itw