All eyeballs on inflation stats on Wednesday

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Eyeballs are sharply focussed on Wednesday’s economic stats and with inflation seemingly lurking around every statistical corner the narrative is building towards a December interest rate rise at the Bank of England.


Whether or not the Bank of England actually opts for a rate rise will be a matter of continued speculation for the weeks to come – and indeed the last meeting minutes showed policymakers were very recently leaning stubbornly against a hike (with seven votes against two keeping the central bankers sat on their hands).


Tuesday saw expectations of a hike rise further after better than expected employment data, against a backdrop that included yet more headlines about a further increase in wholesale gas prices, with the price for December delivery to the UK up 9%.


Only yesterday, the Bank of England governor Andrew Bailey described himself as “uneasy” about rising inflation and that was before Tuesday’s employment numbers further food for thought.


“Andrew Bailey says he’s uneasy about rising inflation and the jobs figures are another indicator that there could be a fresh sugar rush of higher wages.


“Already starting salaries this autumn are at their highest rate in 24 years but Mr Bailey still appears steadfast in this view that sweeteners for staff will be temporary and that we won’t be returning to the wage spiral of the 1970s.


“But the layers are building up for a sustained increase in prices in the medium term. The supply chain crisis has already spread across the globe, pushing up costs for companies and shows little sign of easing just yet. The pandemic bounce back has buttered up demand for goods, and now potential has grown for higher wages to congeal”.


There’s a similar story playing out in America, though over there retail sales data will this afternoon provide economists with their next steer.

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