The impact of the Iran War on household bills is expected to show in a rise in July’s inflation figure.
Economists predict the Consumer Prices Index, which the Office for National Statistics releases on Wednesday, to come in at 2.9%, up from 2.6% in June.
The increase is likely to be driven by higher domestic energy bills following the recent 13% jump in Ofgem’s energy price cap, according to forecasters.
Investec economist Ellie Henderson said the energy price cap rise alone will add 0.5 percentage points to inflation for July.
The cap, which reset on 1 July, initially sheltered consumers from the surge in energy prices following the outbreak of the Middle East conflict.
Despite recent government measures to reduce the cost of living, such as discounted leisure activities this summer and the cut in VAT on electricity bills from October, Deutsche Bank expects UK inflation to peak at around 3% this year, before easing to 2.4% next year.
July’s data will inform the Bank of England’s next move on interest rates at its 17 September meeting, after leaving rates unchanged at 3.75% so far this year.
Markets are currently pricing in a small chance of a rate hike at next month’s gathering of the Monetary Policy Committee, though a single increase to 4% is expected by the end of the year.
Rate setters will have a further set of inflation data to digest before the September meeting, with August’s CPI figures due on 16 September.
JD Sports
The sportswear retailer has already primed the market for a fourth consecutive year of falling profits, so the focus will be on the timing of a return to like-for-like sales growth, say AJ Bell analysts.
Ahead of the second-quarter trading update analysts are projecting a small increase in organic sales, counterbalanced by a 1.4% drop in like-for-like growth.
Investors will be hoping for an update on the second tranche of JD’s £200 million share buyback programme which officially started in August.
Any slippage on the full year profit outlook or commentary on deteriorating macro conditions could see the shares trip on their shoelaces after a fledgling recovery since May.
DIARY
Monday 17 August
- Rightmove house price index
Tuesday 18 August
- UK average earnings and unemployment data for June
Wednesday 19 August
- UK inflation figures for July
- Release of FOMC minutes
Thursday 20 August
- Full-year results from Hays
- Q2 trading update from JD Sports
- US weekly jobless claims
Friday 21 August
- UK retail sales for July
- UK public sector finances for July
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