Consumer prices in the United Kingdom are expected to have risen during the month of September, largely owing to the downward contribution from lower energy prices. Also, inflationary pressures have increased in the recent past, mainly due to the weakness in the GBP, which in turn, increases import prices.
U.K.’s CPI inflation rose to 0.9 percent y/y in September, from 0.6 percent y/y in August, due to the downward contribution from lower oil prices. CPI core inflation is likely to have risen to 1.4 percent in September, from 1.3 percent in August, Danske Bank reported.
Further, the trade-weighted GBP is around 18 percent weaker than a year ago, so potentially import prices could increase accordingly over time.
"Although we expect CPI inflation to increase above the 2 percent target next year, we believe the Bank of England will see through this to support the economy, as the higher inflation is only temporary," Danske Bank commented in its latest research report.
Meanwhile, for the eurozone , the European Central Bank (ECB) is set to release its bank lending survey. In light of the market's reaction on the banks' weaknesses, together with the ECB's dependency on a well-functioning banking sector, more focus is expected on the figures than usual.
