UK inflation is rising. Next Wednesday’s numbers could show CPI inflation has risen to almost 5.5 per cent, its highest rate since 1992, thanks in large part to higher utilities and petrol prices. It is likely to rise further by April before dropping back thereafter.
This won’t be the only sign of inflation. Producer price numbers could show manufacturing output price inflation running at almost 10 per cent, and input price inflation at almost 15 per cent – although with oil and some other commodity prices levelling off recently the latter might be near its peak. And flash purchasing managers surveys will show manufacturers reporting big price rises.
One element of inflation is missing, however – wage growth. Tuesday’s figures could show that average weekly earnings rose by less than four per cent in the year to November, which means they have fallen in real terms: PAYE data on monthly pay is likely to tell a similar story. This should quell fears of a wage-price spiral, as it suggests workers in aggregate don’t have the bargaining power to raise real wages.