How is UK economy doing?

The Bank of England has said that the interest rate hike it is likely to make “in the coming months” depends on whether inflation pressures continue to build and the economy moves nearer to growing at full capacity.

Most economists polled by Reuters now expect the central bank to raise rates on November 2, after its next meeting, lifting the official cost of borrowing to 0.5% from 0.25%, the first increase in more than 10 years.

Below is a summary of what the BoE has said it is expecting to see in the British economy, how the economy has been performing and when the next key data releases are due.

Inflation

What the BoE said: The central bank, which has a target of 2% inflation, said on September 14 that consumer price growth will reach slightly above 3% in October, taking it to its highest since March 2012.

What has happened: In August the CPI rose to 2.9% in August from 2.6% in July. Many private-sector economists think it will hit 3% or slightly higher soon, before easing back.

The official inflation reading for September is due on October 17, two weeks before the BoE’s next rates announcement, and economists polled by Reuters expect CPI to rise to 3%.

Wages

What the BoE said: In August the BoE forecast that annual wage growth would be 2% in the fourth quarter of 2017, rising to 3% in the same period of 2018.

What has happened: Wage growth during the three months to July was a bit stronger than the BoE expected at 2.1% year-on-year. The BoE said some of this strength was due to bonuses. A BoE survey has shown companies plan to offer pay deals in the 2-3% range, while a separate survey by the Chartered Institute of Personnel and Development gave a lower 2% average for the private sector.

Unemployment

What the BoE said: The central bank forecast in August that unemployment would average 4.4% in the last three months of 2017 before rising slightly to 4.5% in 2018 and 2019, while labour force participation for over 16s would remain steady at 63.5%.

What has happened: Unemployment fell faster than forecast, dropping to 4.3% of the workforce in the three months to July from 4.4% in the second quarter.

That is below the 4.5% level that the BoE has previously said could be a trigger for higher inflation.