WisdomTree Europe reacts to latest CPI inflation

Reacting to today’s news that Consumer Prices Index inflation climbed to 0.5% in June, Viktor Nossek, director of research at WisdomTree Europe, said:
“The latest move upwards in CPI inflation is above expectations, driven by climbing petrol prices and an uptick in consumer spending, and we think this is just the start.
“With the pound down more than 10% against the US dollar since Brexit, investors need to prepare themselves for inflation to climb rapidly, and we could see CPI move up sharply over the coming months as the impact of weak sterling feeds through into the real economy. Higher energy costs may likely curtain consumer spending for H2 2016, unless the labour market tightens, and pay increases work to absorb it. But amidst Brexit uncertainty, trade and capital flows are expected to remain subdued, undermining the prospects for the UK’s labour market to actually be resilient in that regard.”