Jamie Dutta, a market analyst at Vantage, an international multi-asset trading platform, said policymakers at the Bank of England will pay close attention to UK wage data due on Tuesday ahead of Wednesday’s UK CPI data.
The potential transmission of wage growth to inflation is key as the BoE grapples with serious structural problems and labor shortages.
Dutta also said headline CPI in the UK is expected to fall sharply as energy prices fall further, but core inflation is likely to fall only slightly and remain well above the 2% target.
A future re-cap on energy prices should generate more disposable income for consumers, which, while welcome by mortgage payers, could also put secondary pressure on core inflation, he added.