More importantly, though, nobody, least of all the Bank, knows how the crisis will develop between now and June. Energy prices are unpredictable, but the BoE is also acutely aware that the longer the Strait of Hormuz disruption endures, the more likely the unforeseen knock-on effects on supply chains.<\/p>\n
That said, the fact that natural gas prices have stayed remarkably contained \u2013 and have even flirted with pre-war levels in recent days \u2013 is a significant source of near-term comfort. Natural gas \u2013 and the role it plays in setting electricity prices and heating bills \u2013 is in many ways a bigger vulnerability for the UK than oil.<\/p>\n
The other challenge the Bank has is that the data received since the March meeting hasn\u2019t really told it much about how the economy is responding to the war. Inflation is up, but so far only on the predictable rises in motor fuel and heating oil costs. Consumer inflation expectations have also predictably surged.<\/p>\n
But measures of corporate price behaviour are more mixed. The PMIs pointed to rising output price pressure. But the Bank’s own survey of companies \u2013 the Decision Maker Panel \u2013 didn’t point to an unduly large pick up in inflation expectations. Unsurprisingly, most respondents said the war would lead them to raise prices, but crucially, wage growth expectations \u2013 the real driver of longer-term inflation persistence \u2013 are unchanged since the crisis began.<\/p>\n
In short, it will take time to get a decent sense of whether firms are able to pass on higher energy costs to their consumers. And the Bank will want sight of the April CPI data, which will be released in May. That will give us a sense of how aggressive (or not) price hikes were at the start of the financial year. Given that large swathes of prices in the service sector are only updated once per year, this is fairly consequential for the inflation profile over the next 12 months.<\/p>\n","protected":false},"excerpt":{"rendered":"More importantly, though, nobody, least of all the Bank, knows how the crisis will develop between now and…\n","protected":false},"author":2,"featured_media":549265,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-549264","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/549264","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=549264"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/549264\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/549265"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=549264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=549264"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=549264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}