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UK inflation in line with expectations while core inflation surprises - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 19, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at TDS, notes that the UK headline Inflation data came in as markets expected, at 0.2% y/y, while core inflation surprised on the upside at 1.4% (markets and TD looking for 1.2%).

    Key Quotes

    “The underlying details of the release are very weak, however, with all but one major component of the CPI weaker (or unchanged) on a y/y basis. Airfares surged to 46% y/y, from -12% y/y the month before, and were entirely responsible for the positive headline inflation figure—if they’d remained at -12% y/y, inflation would have been -0.1% y/y.

    Given the volatility in airfares, this strength in inflation may well be a temporary phenomenon, and when coupled with anticipated cuts to utility prices in January, should leave inflation back on a weak path next month. Carney also gives a speech at noon, and here we hope to see him provide an update on his views on the appropriate timing of a hike in Bank Rate.”
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