The UK’s Consumer Price Index hit 0% – no change in prices in the past year. This is below expectations. Also core inflation falls short of predictions, with 1.2% instead of 1.3% expected. The RPI stands at 1%, slightly better than 0.9% predicted.
GBP/USD is slightly lower. Cable dropped to 1.4914 before bouncing back up. Nevertheless, it remains below the pre-release levels.
Food, furniture and computers weighed on prices. Oil was rather stable in February after long months of falls, but the impact is clearly seen in the year over year change.
Other related numbers: PPI Input rose by only 0.2% m/m and PPI output by the same scale. The year over year House Price Index is down to a gain of 8.4% instead of over 10% predicted.
The United Kingdom was predicted to report a minimal gain of 0.1% in prices y/y for the month of February, mostly due to the fall in oil prices. In January, the UK saw headline inflation of 0.3%. The retail price index (RPI) carried expectations for a rise of 0.9% after 1.1% beforehand. Core CPI was expected to tick down from 1.4% to 1.3%.
GBP/USD traded around 1.4950 towards the publication.
The target inflation is 2%. When it comes above 3% or below 1%, the governor of the BOE has to write an open letter to the Chancellor of the Exchequer explaining the reasons for this and the means to tackle it.
Mark Carney pointed the blame to oil prices. In addition, the MPC sees inflation “rising sharply” from the lows once the effect of the black gold moves away.
Cable has been recovering thanks tot he weakness in the US dollar and not really on the UK situation. On the contrary: hints that the Bank of England could introduce further monetary loosening weighed on the pair.
Later we will get inflation numbers from the US.
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