WisdomTree Europe’s Nossek comments on inflation figure

Following the news that CPI inflation came in at 3% in December 2017, please see below for a comment from Viktor Nossek, Director of Research at WisdomTree in Europe has commented on the news that CPI inflation came in at 3 per cent in December 2017.

Nossek says: “As expected, CPI inflation has fallen back from its multi-year high to end 2017 at 3 per cent. We have long expected the rise late last year to be capped around this level because of a lack of underlying wage inflation in the UK, and indeed inflation should now begin to slide back towards the Bank of England’s 2 per cent target.

“The outlier to this scenario will be the oil price. The sharp rally in oil sparked by OPEC and others restricting supply could yet push up prices at the pump and feed through to UK consumers.

"Such a scenario could represent a real challenge to UK consumers, as with real GDP growth somewhat muted and no wage hike pressures, the Bank could look through rising commodity prices as short-term, creating the risk of stagflation for savers and investors."
 

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Beverly Chandler
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