Its not all about Salzburg (but most of it is), there is UK CPI data due today at 0830GMT

Previews via:


  • We expect a small fall in inflation from 2.5% to 2.4% in August. This would be the same as the BoE's estimate, though the MPC had expected inflation to rise to 2.6% in July which would have implied a 0.2pp fall (rather than a 0.1pp fall based on July's actual outturn). R


  • In July it was the transport category that made the largest upward contribution to CPI inflation. Fuel prices rose again last month, meaning that should continue to be the case in the August. However, with the year-on-year increase in pump prices easing and the pass through to prices from previous falls in GBP continuing to fade we see CPI inflation falling slightly to 2.4% y/y this month from 2.5% y/y previously.
  • The big surprise in July was, however, the narrowing of the CPI-RPI wedge to -0.76ppts, particularly recent BoE rate rises mean that the pressure should be toward a widening of the wedge through higher mortgage interest payments. We anticipate that the narrowing of the wedge in July may have been a one-off and expect it to widen to 0.9pppts again this month with RPI inflation at 3.3% y/y.


ps. Why has no one asked me where Salzburg is in Australia? ;-)