Economist Marc Brütsch of Swiss Life predicts that UK inflation spiked to 2.9% in August, from 2.6% in July.
Royal Bank of Scotland predict that the Consumer Prices Index rose by 2.8%, but will spike over 3% this autumn.
Just 15 minutes to wait….
Expectations that Britain’s inflation rate rose in August are pushing sterling higher this morning.
The pound is up almost half a cent at $1.321 against the US dollar.
A high inflation reading puts more pressure on the Bank of England to raise interest rates from the record lows (making it more lucrative to hold money in pounds).
It says something about the financial markets that shares can rally on the back of a devastating storm that was only slightly less awful than feared.
But what? Analysts at ING told clients this morning that investors are remarkably relaxed:
“Whether that equity reaction is Panglossian complacency or a sign of wonderful underlying fundamentals remains open to question.
Even Category 5 storms can now be added to the list of things that ’Don’t Really Matter’.
If in doubt, blame the media…..
European stock markets are pushing higher in early trading, as the momentum from Wall Street’s rally ripples back to the City.
Naeem Aslam of Think Markets says traders have regained their appetite for riskier assets.
Investors are surely feeling less concerned about the potential hurricane damage cost. This has brought back the traditional risk on trade.
The new (and watered down) sanctions on North Korea agreed by the United Nations last night are also boosting the markets today, says Matt Simpson, senior market analyst at Faraday Research.
Global stocks hit fresh record highs
World stock markets are at record highs this morning, thanks to relief that the economic cost of hurricane Irma will probably be lower than feared.
Last night, America’s S&P 500 index finished at its highest ever level, with insurance firms surging.
Asian stocks have hit a 10-year high today, and European markets are also up in early trading.
This has driven the MSCI All Country World Index – a broad measure of stocks around the globe – up to a new alltime peak of 484.12 points.
Overnight, most powerful storm in Atlantic history has been downgraded to a tropical depression after causing terrible damage in the Caribbean, and in the Florida Keys region.
The repair bill will run into many tens of billions, but is likely to miss the worst-case estimates – because Irma changed course and didn’t strike a direct hit on the cities of Miama and Tampa.
That’s a relief for the insurance industry, who were looking at a £150bn bill for Irma at one stage.
But traders should remember that 10 fatalities have been reported in the US, and another 37 in the Caribbean. Irma has still been a monster. US officials are warning of a possible humanitarian crisis unless power and water can be restored, and the clean-up job will be huge.
The agenda: UK inflation to show cost of living squeeze continues
Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.
Britain’s cost of living crisis will rear up again this morning, when new inflation figures are released.
Economists predict that inflation jumped to around 2.8% per year in August, up from 2.6% in July. That’s close to the four-year high of 2.9% which the consumer prices index struck in May.
If so, that would mean that the average Briton’s real pay is falling. Earnings only rose by 2.1% in the three months to June (we get new figures tomorrow), meaning inflation is more than eroding any wage increases.
That’s a particular blow for nurses, doctors and other public sector workers, thanks to the government’s 1% pay cap.
The weak pound is driving inflation higher, by making imports more expensive.
Higher fuel prices are also pushing the cost of living up, according to James Brown of consultancy firm Simon-Kucher:
“For road users, petrol prices are up after the respite given by lower prices over the summer.
“Driving to work cost 5% more in August and early September than last year.”
Separate house price figures will show how Britain’s housing sector performed in July.
It’s a big day for the car industry too, as the Frankfurt Motor Show kicks off.
We’ll also be watching for comments from the Bank of England’s markets director, and the vice-president of the ECB:
- All day: The Frankfurt Motor Show
- 9.30am BST: UK inflation for August
- 9.30am BST: UK house price figures for July
- 10.20am BST: Bank of England markets director Chris Salmon speaks in Barcelona
- 3.45pm BST: European Central Bank vice-president Vítor Constâncio speaks in Frankfurt