Jens Larsen, RBC Capital Markets
I was a little surprised on CPI (Other OTC: CPIC - news) because I was expecting utility prices to have less of an impact. There are still quite a lot of utility prices increases in the pipeline. RPI seems to be less of a surprise - and that is the number that's important for the linker market.
= Alan Clarke, Scotiabank =
It's broadly in line with expectations. Given that British gas wasn't included this month, it would have added another 0.1 percentage point, and whether it came this month, next month or the month after ... we know it is coming, and all utility providers together will add about 0.4 percentage points to inflation between now and January.
Food also struck me as showing a very chunky increase, that also is going to add progressively to inflation over the next six months.
It's a bit of a headwind to consumers, consumers have enjoyed a bit of an easing in the headwind or the squeeze on their disposable income, but that squeeze is intensifying. It's not going back to where it was at the peak, but it's a pinch nonetheless.
Higher inflation makes it harder for them to restart QE. I don't think it makes any difference to the Bank of England. They know these things are outside of their control: Gas bills, droughts, they can't control that.
= Philip Shaw, Investec =
No huge surprises on the CPI data. Food price inflation is a little higher than we expected and this is likely to be a recurring theme over the next few months.
There are some upsides and downsides. We believe inflation will rise above three percent over the next few months. We feel a likely rise in inflation is going to result in the MPC (KOSDAQ: 050540.KQ - news) keeping policy on hold, but much depends on how weak the economy is and if we were to see a very weak patch in activity then the MPC could look through a period of increased inflation rates.
Our view is that GDP will rise modestly over the quarter, as it looks like we'll see a bounce back in construction.
The PPI data looks satisfactory.
= Samuel Tombs, Capital Economics =
Given the recent drop in annual growth in average earnings to just 1.3% in October, the squeeze on households’ spending power therefore looks likely to persist throughout 2013. Nonetheless, we have not lost faith in our view that inflation will eventually fall to a very low rate. In this light, note that today’s 0.2% monthly drop in producer output prices in November suggests that pipeline price pressures are weak.
= Howard Archer, IHS Global Insight =
It currently looks highly likely that consumer price inflation will hit 3.0% around the turn of the year as it continues to be pushed up in the near term by increasing energy tariffs (more utilities are raising prices in December and January) and elevated food prices.
The upside for consumer price inflation should be limited by modest underlying price pressures and, hopefully, generally softer oil prices. Underlying price pressures should be contained over the coming months by significant excess capacity, still muted economic activity, further moderate wage growth amid appreciable labour market slack, and a likely extended need for retailers to price as attractively as possible to persuade still worried consumers to spend.