On Wednesday, inflation data is due in the United Kingdom. Analysts at Well Fargo, expect the CPI to show an increase of 0.4% in July in line with market consensus. According to them, the British economy has not yet experienced peak inflation and they believe CPI is likely to trend closer to 10%. 

Key Quotes: 

“U.K. inflation is currently the highest on record, with the June CPI hitting 9.4% year-over-year. While core inflation dipped slightly in June, the core CPI is running close to 6% year-over-year, a signal of broad price pressures across the entire economy. Around the world, we have gotten preliminary evidence that inflation may be peaking; however, those dynamics may not apply to U.K. CPI. Contrary to the U.S., we believe U.K. inflation rose in July and the British economy has not yet experienced peak inflation.”

“European energy prices continue to move higher as a result of limited exports from Russia and supply shortages across the continent. As inflation rockets higher, we believe the U.K. economy will be one of the first major economies to tip into recession by the end of this year. Q2 GDP data reveal the recession may be imminent as the economy contracted in the second quarter. Bank of England policymakers also forecast a recession lasting through 2023 due to energy shortages and more aggressive tightening.”