Energy Shock Reaches 2022 Levels, But UK Inflation Transmission Remains Limited
Britain's energy shock has reached nearly the same level of concentration in UK inflation as it did in September 2022, but so far, it hasn't spread widely through the economy. According to Permutable's Global Macro Sentiment Indices (GMSI), energy accounted for 42.1% of the absolute UK inflation signal on September 9, 2026, compared with 42.7% on the same date in 2022.
The current episode looks similar to 2022 at first glance, but the key difference is what happens next. In 2022, higher energy costs spread rapidly through the inflation basket, while this year's pressure has remained concentrated in energy. The food component of inflation shows a stark contrast between the two periods.
Permutable's analysis suggests that manufacturers have absorbed higher energy and logistics costs in their margins rather than passing them on immediately. This could delay the pass-through effect, but there is still scope for it to happen eventually. The Bank of England will be watching closely as it assesses whether the energy shock will become a broader inflation problem.