WisdomTree’s Nick Leung: Inflation a real threat amid rising energy bills and weak pound

Following the news that CPI inflation remained at 3% in October, Nick Leung, research analyst at WisdomTree in Europe commented:
“Today’s CPI figure shows just what a real threat inflation has become, at least in the short term, as a combination of rising energy bills, the end of the supermarket price war, and yet more fallout from the weak pound raises inflation to a multi-year high.
“However, the inflation outlook will likely moderate ahead, especially as higher input-cost induced inflation and lacklustre wage growth keeps a lid on consumer spending. Indeed, this is already being reflected in weaker retail sales, which fell YoY for the first time since 2013.
“Against this backdrop, the BoE will be encouraged to continue adopting a dovish tone and remain in accommodation mode. This may provide additional stability to a UK economy that is still vulnerable to Brexit-related shocks and uncertainty.”