HSBC economist Chris Hall says UK inflation data show almost no evidence of
indirect energy pass-through, suggesting the Bank of England may keep rates on
hold next week and beyond. Headline inflation fell to 2.6% in June from 2.8% in
May, driven by motor fuel (especially diesel); core inflation remained at 2.6%,
above consensus. Hall says the first sign of pass-through would appear in food
inflation, which has eased, and there is so far no evidence of higher wages or
broader price-setting, though recent oil and gas price rises add upside risk to
the BoE's outlook inflation.
