BOE Chairman Carney
CPI (YoY) (U.K.)
Inflation Is Cooling Off in UK
Starts Wednesday, May 20, 2020 at 06:00
Updated Wednesday, May 20, 2020
Inflation used to be at around 3% at the beginning of 2018 in Britain, as prices increased from 2016 after the Brexit referendum due to a weakening GBP. The annualized CPI started to cool off as the year progressed, but it made one last attempt to turn higher again in August as it jumped to 2.7%. Although, the declining trend continued and we ended the year at 2.1%, as the report released in January showed. Then in January inflation declined to 1.8%, but this is still a decent level of inflation, not too high and neither too low, as we are seeing in other parts of the globe, including Japan and the Eurozone. But, that's still below the BOE target which is at 2.0%. Although, core CPI remained unchanged at 1.9%. Inflation remained at around 2% since then, although, in August we saw a dive in headline CPI to 1.7% and core CPI to 1.5%. But, core CPI moved higher to 1.7% again in September, but cooled off further to 1.5% in October. In November, inflation was expected to tick lower to 1.4%, but remained unchanged at 1.5%. Although, in December inflation lost 2 points and fell to 1.3%. In January, headline CPI increased again to 1.8%, but fell to 1.7% in February and cooled off further to 1.5% in March. I expect inflation to weaken again in April, due to coronavirus shut down. Please follow us for live coverage of this event by market analysts.
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About CPI (YoY) (U.K.)
U.K. CPI (MoM) is a primary measurement of inflationary pressures facing the GBP. It is derived and presented by the National Statistics Bureau, a governmental entity. U.K. CPI (MoM) is a comparison of retail prices facing a typical basket of goods and services, compared on a month-over-month basis. Monetary policy decisions, trade balance, and consumer confidence are sensitive to CPI. Currency markets involving the GBP are receptive to a growing CPI, as it is a signal of inflation. As inflationary pressures grow or reside, the Bank of England (BOE) crafts monetary policy accordingly. High CPI values are often viewed as a precursor for tightening monetary policy toward the GBP, while low readings are conducive to a dovish tone.U.K. CPI is capable of swaying GBP valuations dramatically. Strong values lead to bullish participation for the GBP and lagging CPI facilitates bearish price action.