UK to announce the November inflation rate
The UK’s Office of National Statistics will release November inflation data today amid last-minute trade negotiations between the UK and the EU over a post-Brexit trade agreement.
Economists expect inflation to remain well below the Bank of England’s (BoE) target of 2% as economic activity remains depressed due to ongoing COVID-19-related restrictions placed on businesses and public gatherings. Little to no increase over last month’s rate would put the November figure between 0.7%-0.9%. The BoE forecasts upward pressure on inflation in the early part of next year, contingent on widespread inoculations and a friendly post-Brexit business environment.
The latter point remains far from certain, as negotiations have repeatedly missed deadlines and prospects for a deal have at best shown a narrow path to success. Expect inflation to rise in the medium-term, likely past the BoE’s target, if a no-deal scenario transpires and cross-border trade faces increased tariffs, higher operational costs and product scarcity. However, an immediate shock may be avoided if the UK and EU agree to the stop-gap measures put forth by European Commission President Ursula von der Leyen, which seeks to keep goods and people flowing in the short-term—a likely outcome given the parties’ aversion to the probable fallout.
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