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After the Brexit vote, price data will follow

We are sure that on Wednesday morning all the media attention will still be on Tuesday’s Brexit vote. However, in other news, the ONS will tell us how prices grew in December.

CPI is on the right track to hit the Bank of England target of 2%. However, Tuesday’s Brexit vote would be a crucial turning point for future CPI, considering how important a stable currency is to avoid high inflation, and how the price increase we saw in 2017 was the direct consequence of the sterling plunge in the aftermath of the EU referendum of 2016.

November saw CPI down to an annual 2.3% growth and expectations are for an even lower expansion in December, particularly due to contracting oil price.

The Brent value would impact even more producer prices that are falling from the double digit increases we have seen recently. The increase was particularly acute on the input side, with manufacturing bearing the higher cost without being completely able to pass it on to customers. Indeed, PPI at factory gates have been higher than usual (+3.1% last month), but not even close to the input ones.

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