The past week’s economic data has given the Bank of England some serious thinking to do

However, it seems as though the bank actually has little evidence in recent data to back up that aggressive hawkishness, at least when it comes to rising domestic inflationary pressures, one of the main reasons given by the BoE for its shift in tone.

That’s the view of Andrew Goodwin, lead UK economist at Oxford Economics, who wrote to clients this week that “Data offer scant backing to MPC’s inflation concerns.”

Earlier in the week, the Old Lady of Threadneedle Street released its latest agents’ summary of business conditions, which polls the central bank’s operatives in the UK’s regions to create a holistic picture of what’s going on in the economy.

The survey pointed to wages recovering strongly this year, with businesses expecting wage growth to increase to 3.1% in 2018, up from 2.6% last year.

“These results fit neatly alongside the narrative that the Committee has been using over the past six months,” Goodwin wrote.

“But such evidence of escalating underlying inflationary pressures is largely survey-based and forward-looking. Indeed, the same survey has reported no pickup in the pace of unit labour cost growth in the dominant services sector since mid-2014.”

Goodwin adds that “there was little in the remainder of the week’s data to suggest that inflation needs taming,” pointing to Tuesday’s release of official inflation data for January by the Office for National Statistics.

Inflation unexpectedly remained at 3% in January, having been expected to fall. Strangely, the cost of entry to attractions such as zoos and gardens was cited by the ONS as a key driver in the higher than expected reading.

“January’s inflation data betrayed little cause for concern” for the Bank of England, Goodwin wrote.

“CPI inflation was flat at 3.0%, despite some very powerful positive base effects arising from some unusual seasonal movements in clothing prices at the start of last year.

“These effects unwound the following month, meaning that these base effects will reverse in the February data. And there will be further negative base effects from last February’s sharp rise in petrol prices. So February looks set to mark the point at which inflation starts to decisively drop back.”

Not only does official headline consumer inflation data point to inflation falling over the coming months, so too do other official inflation indicators.

“The producer prices data also pointed to a further weakening in consumer price inflation over the coming months,” Goodwin wrote.

“Annual input cost inflation of 4.7% was the slowest since mid2016, while the 0.1% monthly increase in factory gate prices was the smallest for seven months.”

The sharp fall in the value of the pound following the UK’s vote to leave the EU in the summer of 2016 was the initial driver of inflation, which surged from close to zero to around 3% in the course of just over a year.

However, Goodwin argued, the impact of that depreciation “is clearly now fading and, with oil now trading some 12% below its late-January peak of $71 per barrel, the factors which have been so important in pushing up inflation over the past year are rapidly melting away.”

Whether or not the Bank of England has overreached with its assertions about hikes in the future given current data is unclear, but the last few days have certainly given the bank some serious thinking to do.