UK January CPI +1.8% vs +1.6% y/y expected

Author: Justin Low | Category: News

Latest data released by ONS - 19 February 2020

  • Prior +1.3%
  • CPI -0.3% vs -0.4% m/m expected
  • Prior 0.0%
  • Core CPI +1.6% vs +1.5% y/y expected
  • Prior +1.4%
A decent improvement in both the headline and core reading, and that should provide some encouragement to the BOE that they aren't quite at risk of falling into the low inflation trap just yet - for now at least.

Looking at the details, the rise in inflation is due to higher petrol prices and airfares falling less than a year ago, with annual house prices also growing across all regions in the UK for the first time in nearly two years.

That should keep the BOE sidelined for now but it doesn't really change the overall picture too much. The pound is off lows of around 1.2985-95 to 1.3000-05 currently but I don't see this as a major catalyst for a push higher.

Inflation is still under the 2% level and there is still a risk for the BOE having to act if price pressures ease in the coming months. But for now, the decision to keep rates on hold is certainly vindicated by the latest reading.

Gains in cable are likely to be capped by similar levels to yesterday i.e. 100-hour moving average @ 1.3023, trendline resistance around 1.3036, and 1.3050-70 region.

Some other details on the day as producer price and retail price figures are released:

  • PPI output +0.3% vs +0.1% m/m expected
  • PPI output +1.1% vs +1.0% y/y expected
  • PPI input +0.9% vs -0.4% m/m expected
  • PPI input +2.1% vs -0.1% y/y expected
  • RPI -0.4% vs -0.6% m/m expected
  • RPI +2.7% vs +2.6% y/y expected
  • December HPI +2.2% vs +2.5% y/y expected
  • Prior +2.2%; revised to +1.7%

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