Inflation Picks Up in UK, Whilst Remaining Subdued in Europe - Forex News by FX Leaders
The CPI increased in the UK despite lock-downs

Inflation Picks Up in UK, Whilst Remaining Subdued in Europe

Posted Wednesday, January 20, 2021 by
Skerdian Meta • 1 min read

Inflation turned softer during the lock-down months in the UK, but it improved in summer, as the economy was rebounding well. Then it started to soften again in autumn, falling to 0.3% in November, but today’s report is showing a reversal in December and an increase, especially for the core CPI (consumer price index). The Eurozone inflation on the other hand, remains negative. The GBP/USD has been bullish today, probably because of the inflation report, while the Euro has turned bearish.


UK December CPI  Report

  • December CPI YoY +0.6% vs +0.5% expected
  • November CPI was +0.3%
  • Core CPI YoY +1.4% vs +1.3% expected
  • Prior core CPI was +1.1%

There was a slight delay in the release by the source. UK inflation crept higher in December, with weaker energy prices filtering out somewhat, helping to bolster price pressures in general. That said, inflation is still remaining rather subdued in the bigger picture of things, and that will keep the BOE on its toes if there is no further meaningful boost this year.

Looking at the details, ONS notes that clothing prices put upward pressure on inflation last month, with rises in transport costs and petrol prices also making a contribution.

Producer price and retail price figures:

  • PPI output +0.3% vs +0.2% m/m expected
  • PPI output -0.4% vs -0.6% y/y expected
  • PPI input +0.8% vs +0.9% m/m expected
  • PPI input +0.2% vs +0.5% y/y expected
  • RPI +0.6% vs +0.6% m/m expected
  • RPI +1.2% vs +1.2% y/y expected


Eurozone December Final CPI Report

  • December final core CPI +0.2% vs +0.2% y/y prelim
  • CPI -0.3% vs -0.3% y/y prelim
There was no change to the initial estimates, and this reaffirms that core inflation in the euro area remained at a record low towards the end of 2020.
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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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