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UK inflation: Stability likely to be temporary - Lloyds Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 22, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Today’s inflation numbers from the United Kingdom of February showed no surprises and most number in line with expectations. Analysts from Lloyds Bank consider that domestic cost pressures are well positioned to re-emerge toward the end of the spring.

    Key Quotes:

    “UK inflation belied expectations of a further nudge upwards in February. The annual rate of CPI inflation repeated its January print of 0.3% y/y rather than rise to 0.4% as anticipated by ourselves and the market.”

    “The ‘core’ rate (excluding energy, food, alcohol and tobacco) and RPI inflation, which is often the starting point for wage negotiations, were also unchanged at 1.2% and 1.3% y/y respectively.”

    “Overall, today’s out turns underscore the challenge faced by the MPC to push inflation higher, especially with March and April cuts in utility prices likely to pose further obstacles to their expectation of a gradual climb in annual inflation towards 1% by the end of the year.”

    “However, with the labour market continuing to tighten, signs that the recent softening of pay growth may be ending, and the recent recovery in oil prices set to continue, underlying domestic cost pressures are well positioned to re-emerge towards the end of the spring and spur a resumption of the recent uptrend.”
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