UK Inflation falls more than expected in May to 3.4 pct yy

inspector_monkfish

09:30 15Jun10 UK CPI falls more than expected in May to 3.4 pct yy

LONDON, June 15

British consumer price inflation fell slightly faster than expected in May, helped by lower food costs and boosting hopes that April's 17-month high marked a peak.

The Office fo National Statistics said that the annual rate of CPI inflation fell to 3.4 percent in May from 3.7 percent in April, a somewhat bigger drop than the fall to 3.5 percent forecast by economists.

The decline was driven by a fall in food prices on the month -- especially those of grapes -- as well as slower rises in the price of petrol, alcohol and tobacco than the same month last year.
The news will be welcomed by the Bank of England, which last month had to write a public letter explaining why inflation had stayed so far above its 2 percent target for so long.

On the month, consumer price inflation rose by 0.2 percent, a third the 0.6 percent rate recorded in April and less than the 0.3 percent increase expected by analysts.

The retail price inflation gauge, used as a basis for some wage deals, fell to 5.1 percent on the year from 5.3 percent, versus forecasts for an easing to 5.0 percent. Housing costs -- which have a higher weight in RPI than in CPI -- rose by 3.5 percent, their fastest pace since May 2008.

Food costs in the CPI index were down 0.1 percent on the month and showed their smallest annual rise since February.

The core rate of CPI, which excludes volatile food and energy costs, also fell to its lowest rate since February at 2.9 percent on the year.

inspector_monkfish

09:30 15Jun10 INSTANT VIEW 1-UK May CPI inflation falls more than forecast

LONDON, June 15 - British consumer price inflation fell slightly faster than expected in May, helped by a fall in food costs and slower rises in the price of petrol, alcohol and tobacco, the Office for National Statistics said on Tuesday.

*********************************************************

CPI KEY FIGURES
MAY APRIL F'CAST
CPI %YY 3.4 3.7 3.5
RPI %YY 5.1 5.3 5.0
RPI-X% YY 5.1 5.4 5.0


KEY POINTS
- Lowest yy CPI rate since March 2010
- Lowest yy core CPI rate since February 2010
- Lowest yy RPI rate since March 2010
- Lowest yy food and non-alcholic beverages CPI component since February 2010
- Lowest yy alcoholic beverages and tobacco CPI component since March 2010
- Highest yy miscellaneous goods and services CPI component since April 2009
- Lowest yy fuels and lubricants CPI component since February 2010

Wookster

Good news - lets see if it continues to fall over the next few months.

inspector_monkfish

Cable drops from 1.4740 to 1.4690

Short Sterling Futures all higher

purch

Well that's made 25% of the threads on here redundant :eek: (for the time being )

HAMISH_MCTAVISH

Hi Inspector Monkfish, isn't there also a measure of CPI that excludes the tax rises from things like VAT and duty? I think it's called CPI-Y or something? Any idea what that is currently?

Jonbvn

purch wrote: »

Well that's made 25% of the threads on here redundant

I think there should be IR rises, regardless.;)

Generali

There are several measures for RPI:

RPI
RPI-X (RPI stripping out the effect of interest rate changes on the RPI)
RPI-Y (RPI-X stripping out the effect of indirect taxes on RPI-X)

There are further measures which strip out all housing or only include 'core items'. RPI-Y would be different to CPI-Y as CPI doesn't including housing at all I think whereas RPI-X only excludes mortgage payments.

CPI excludes housing as it is meant to be a harmonised European measure to allow the UK to enter the Euro. European Governments and Central Banks couldn't agree on a common measure for housing costs impacting on inflation (eg do you measure house prices, imputed rents* or mortgage costs to measure this) so they left it out entirely.







*Imputed rent = the rent you would have to pay yourself to live in your own house. Weird I know but there you go.

jim83

HAMISH_MCTAVISH wrote: »

Hi Inspector Monkfish, isn't there also a measure of CPI that excludes the tax rises from things like VAT and duty? I think it's called CPI-Y or something? Any idea what that is currently?

CPIY is at 1.7%
RPIY is at 3.8%

chart

however the annualised measure is quite deceptive at the moment, the actual monthly index gives a clearer picture of what's happening.

chart (edit: note RPIY on right y-axis)

inspector_monkfish

10:42 15Jun10 MALAWI CONSUMER INFLATION AT 7.8 PCT Y/Y IN MAY VS 8.1 PCT IN APRIL - NSO
10:52 15Jun10 Malawi inflation slows to 7.8 pct y/y in May

LILONGWE, June 15 - Malawi's year-on-year inflation slowed to 7.8 percent in May from 8.1 percent in April, the National Statistical Office said on Tuesday.

Slower food inflation has been the main driver of the downtrend. Food accounts for about 58 percent of the country's consumer price index basket.

ess0two

PMSL seems to have poo poo'd a few of the frothing threads on here the last few days.