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21 May 2013
Flash: Inflation still problematic for the UK - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the UK is one of the few high income countries in which measured inflation is still problematic.
The add that news that April inflation measures fell more than expected spurred ideas that guilt purchases may be resumed and Gilts rallied and sterling came off. April CPI slipped to 2.4% from 2.8% in March while the market expected a 2.6% y/y pace. They feel that the drop in transportation and fuel prices accounted for almost half the improvement. Still, the core rate fell to 2% from 2.4% while on the producer level, input prices fell more than expected (-2.3% vs. consensus -1.3%) and this saw the y/y rate dip into negative territory (-0.1%) for the first time since last November. Further, output price slipped 0.1% m/m in April rather than rise 0.2% as the consensus expected. They add that this translates into a 1.1% y/y rise while core output prices are up 0.8% on a y/y basis. They finish by writing, “Separately, the UK reported the ONS house price measure rose 2.7% from a year ago. This is the second fastest pace since December 2010.”
The add that news that April inflation measures fell more than expected spurred ideas that guilt purchases may be resumed and Gilts rallied and sterling came off. April CPI slipped to 2.4% from 2.8% in March while the market expected a 2.6% y/y pace. They feel that the drop in transportation and fuel prices accounted for almost half the improvement. Still, the core rate fell to 2% from 2.4% while on the producer level, input prices fell more than expected (-2.3% vs. consensus -1.3%) and this saw the y/y rate dip into negative territory (-0.1%) for the first time since last November. Further, output price slipped 0.1% m/m in April rather than rise 0.2% as the consensus expected. They add that this translates into a 1.1% y/y rise while core output prices are up 0.8% on a y/y basis. They finish by writing, “Separately, the UK reported the ONS house price measure rose 2.7% from a year ago. This is the second fastest pace since December 2010.”