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Taylor Swift could be one of the dilemmas facing the Bank of England this summer, with economists predicting that the American singer’s arena tour last month could have put some pressure on British inflation.
A busy week of economic data releases will shed further light on the economy after inflation returned to the central bank’s 2% target in May.
This comes after nearly three years of above-target inflation, mainly due to food prices rising much slower than previously.
![(PA Graphics/PA)](https://static.independent.co.uk/2024/07/14/00/157d0706a813ec9a305da58d9ed386b2Y29udGVudHNlYXJjaGFwaSwxNzIwODY4OTEx-2.76573132.jpg)
Economists widely expect Consumer Price Index (CPI) inflation to remain at or near 2% in June.
Analysts at Investec and Deutsche Bank expect the CPI to remain stable, while Pantheon Macroeconomics sees it falling to 1.9% in the latest month, below the bank’s target level.
But experts said the finer details of the inflation data would be more relevant for central banks.
Sanjay Raja, senior economist at Deutsche Bank, said services inflation – a key measure that covers only service-related sectors such as hospitality, culture and housing – was continuing its “gradual decline” towards the target level and could ease to 5.6% from 5.7% in May.
But he warned of temporary pressures, such as rising prices for live music due to Taylor Swift’s UK arena tour.
Swift’s performances in Edinburgh, Liverpool, Cardiff and London in June may have boosted the average concert ticket price for that month.
Policymakers are still focused almost exclusively on services inflation, with the release of just one remaining piece of this data set to determine whether the bank can cut interest rates in August.
James Smith, ING
This is because event ticket prices are collected by the UK Office for National Statistics (ONS) in the month the event takes place, not when tickets go on sale.
As a result, Raja said he expects live music inflation to nearly double to about 10% in June, from 5.7% in May.
Meanwhile, economists will be closely watching new labour market data due to be released on Thursday to see how quickly average wages have risen in Britain, particularly since the national minimum wage was increased in April.
The Bank of England has repeatedly noted that services inflation and wage growth remain the key indicators exerting pressure on broader inflation.
Bank of England Governor Andrew Bailey stressed last month that “we need to keep inflation low”, which he said was why he had decided to keep interest rates unchanged at 5.25% “for now”.
And Hugh Pill, the Bank of England’s chief economist, said on Wednesday that “it is hard to dispute that the persistence of inflation in the UK is just that: persistent.”
“Policymakers remain largely focused on services inflation and one more release of this data will determine whether the bank can cut rates in August,” said James Smith, developed markets economist at ING.
But he said he expected the central bank to start cutting rates this summer “barring any big surprises” in inflation data.