UK consumer prices declined 0.5% in January and, although the year-on-year rate increased to 1.8% from 1.6% which was the highest rate since June 2014, this was slightly lower than the consensus forecast of a sharper increase to 1.9%.
There was significant upward pressure on transport costs which was offset by a decline in clothing prices.
The data will dampen expectations that the Bank of England may need to tighten monetary policy more aggressively to curb inflation, although there was a larger than expected increase in producer prices which suggests underlying pressures may be building.
Sterling weakened significantly following the inflation data with the UK currency moving back below the 1.2500 level as the Euro moved to the 0.8520 area, although gilts reversed initial gains.
The UK currency was resilient at lower levels and regained support during the New York session as the Euro retreated back below 0.8500. The latest labour-market data will be released on Wednesday with a particular focus on the earnings data.
UK Employment At 75.1%, employment for people aged 16-64 looks sort of OK depending on what that really means, but it does not alter the fact that there are currently 1.55 million people who are unemployed, or 4.4% of the potential workforce. Another much more significant number, is that there are currently 9.27 million people […]
Eastern Europe and Central Asia Between 2010 and 2019 economic growth in this large geographic area averaged 4%. According to the World Bank, that growth will decelerate to 2.5% for the next 2 years and even stripping out Russia that will still be lower at 3.3%. Inflation, weak external demand from the EU, global uncertainty […]
British Pound A 7 month high versus USD, and GBP is at present benefitting from the self inflicted wounds that the USA is continuing to suffer, the latest of which is the speculation over whether POTUS will defenestrate the Chair of the Federal Reserve. At the moment, and we choose our words carefully given the […]