While the Federal Reserve meeting is the highlight this week, the UK has a number economic reports and the Bank of England’s Monetary Policy Committee meets. The UK reports inflation tomorrow, followed employment, and then retail sales a few hours before the central bank decision. 

UK price pressures are rising. The past decline in sterling the rise in commodity prices are evident. Headline CPI is expected to rise 0.2% in November.In November 2015, prices were flat. This means that the due to the base effect, the year-over-year rate is expected to rise to 1.1% from 0.9%. If that pans out, UK headline CPI will be at its highest level since late October 2014. Recall that in September-October 2015; the readings were still negative. The base effect will likely be evident in the December report (December 2015 CPI rose 0.1%), and especially in January (January 2016 CPI fell 0.8%).  

The core rate pulled back to 1.2% in October from 1.5% in September. It is expected to tick up to 1.3% in November, which is what it has averaged this year. However, to the extent that producer prices reflect pipeline pressures, UK consumer inflation is likely to rise further in the coming months. Input prices which reflect the increase in raw material prices and fuel, as well as the depreciation of sterling.October input prices were 12.2% above a year ago levels, and they are expected to have accelerated to a 13.5% pace. Output prices, which are manufactured goods prices have been slower to rise. The base effect will turn a 0.2% increase in November into a 2.5% year-over-year increase, up from 2.1% in October.  

The UK labor market growth is not as robust as it has been. Since 2012, the monthly claimant count has mostly fallen. However, February seemed to mark the turning point. Since then, only one month (July) saw a decline in the monthly claimant count.It has risen in the August through October period and is expected to rise again when the data is reported in the middle of the week. However, deterioration has yet to be seen in the unemployment rate, which made a new cyclical low in of 4.8% in the three-month period through September and is expected to remain there in October.