UK Inflation Remains Stable At 3%

Среда, 14 Фев, 2018

Inflation in the food and beverages segment of the CPI eased marginally to 4.58% in January, from 4.85% in the previous month.

In another set of data released by the government, the industrial production for December grew at a slower pace of 7.1 per cent, compared to 8.4 per cent in November which had brought some cheer in the industry as it was a 17-month high. On February 2, the January jobs report showed the fastest year-over-year growth in average hourly earnings since 2008.

The core CPI is viewed as a better measure of underlying inflation trends.

CSO revises IIP growth rate for November to 8.8 per cent from earlier rate of 8.4 per cent.

The Index of Industrial Production (IIP) showed that the growth of 7.1 per cent in December was mainly on account of uptick in the manufacturing sector which constitutes 77.63 per cent of the index.

As the intraday chart above makes clear, that was the market's first response to the CPI number: the 10-year TIPS yield jumped from 0.76 to 0.80 in the first 10 minutes after the number appeared.

Looking at above facts, what will be CPI and IIP for the latest month.

Last week, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) estimated inflation at 5.1 per cent in the quarter ended March, including the impact of HRA. Inflation rose 2.1 percent from a year earlier and core prices increased 1.8 percent.

RBI said, "Though prices eased in December, the winter seasonal food price moderation was less than usual".

"However, the cost of entry to attractions such as zoos and gardens fell more slowly", he explained, as ticket prices tend to fall at the start of the year. "Thereafter, CPI readings could touch 6 per cent by the summer".

Zurich UK head of retail platform strategy Alistair Wilson said: "The overall rise in inflation has been persistent".

Ben Brettell, senior analyst at Hargreaves Lansdown, believes that "domestically driven inflation could seamlessly take over from the sterling-related price rises we've seen since the Brexit vote".

Expectation of economists for the annual inflation in the U.K in January was at 2.9 percent.

"We will be looking for an increase when the ONS reports next week". Prices were forecast to gain 4.1 percent. Price pressures are also seen being fanned by fiscal stimulus in the form of a $1.5 trillion U.S. tax cut package and increased government spending.

Industry group "Manufacture of other transport equipment" has shown the highest positive growth of 38.3% followed by 33.6% in "Manufacture of pharmaceuticals, medicinal chemical and botanical products" and 29.8% in "Manufacture of computer, electronic and optical products".