Here's One Clear Sign U.K. Inflation Is Poised to Jump
Case for BOE Rate Hikes Probably Non-Existent: Yu
Get ready.
On Tuesday, IHS Markit's Purchasing Managers Index showed input prices rose to their highest level in five years, nearing a record high since the survey first began tracking business costs back in 1992. Hard U.K. inflation data has yet to show a big uptick in prices but a surge in input costs for U.K. manufacturers foreshadows the looming threat of inflation for U.K. businesses — as well as the Bank of England's challenge in juicing the economy in the coming quarters while obeying its inflation target.
"The data highlight the impact of the large depreciation of sterling," Daniel Vernazza, economist at UniCredit SpA wrote in a note to clients. "On the one hand, the depreciation of sterling supports U.K. exports as it makes them appear cheaper once expressed in foreign currency. On the other hand, the depreciation of sterling is significantly increasing the cost of (imported) inputs into the production process."