BOE Chairman Carney
CPI (YoY) (U.K.)
Inflation Cooled Off Considerably in August
Starts Wednesday, October 16, 2019 at 08:30
Updated Wednesday, October 16, 2019
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, the Eurozone, etc. But, that's still below the BOE target which is at 2.0%. Although, core CPI remained unchanged at 1.9%. In February, core inflation ticked lower to 1.8% while headline CPI ticked higher to 1.9%. It remained at that level in March but CPI grew further to 2.1% in April. Core CPI remained unchanged at 1.8%. In May, inflation ticked lower to 2.0% and core inflation ticked to 1.7% from 1.8% but core CPI ticked higher again in June to 1.8%. But in July we saw another increase to 2.1% for headline CPI and to 1.9% for core CPI. Although, in August we saw a dive in headline CPI to 1.7% and core CPI to 1.5%. 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.