Three days after it unexpectedly announced that inflation held steady at 3% in January, Britain’s Office for National Statistics will
Three days after it unexpectedly announced that inflation held steady at 3% in January, Britain’s Office for National Statistics will release last month’s retail sales data today.
Following December’s surprising 1.5% fall, today’s release is expected to indicate 0.6% growth in retail sales for January, although UK retail data is volatile and difficult to predict—December’s decrease was 0.9% worse than anticipated.
With the Bank of England last week revealing its intention to get inflation to 2% by 2020, today’s retail data and Tuesday’s inflation readings should be indicators of the UK’s monetary policy for 2018. Indeed, interest rates are likely to rise from 0.5 to 1% by the end of the year, with hikes forecast for May and November, although if inflation remains stubborn, the Bank of England may be forced into a third increase.
Still, sound monetary policy may not be enough in the London’s battle to hit its 2% target; inflation originally experienced a steep increase due to Brexit. As such, a messy exit from the bloc could see Britain’s inflation spiral out of control, likely sparking further discontent over Brexit.
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