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UK inflation falls less than expected in May
inspector_monkfish
Forumite 9.3K Posts
09:30 16Jun09 UK inflation falls less than expected in May
LONDON, June 16 - British consumer price inflation slowed much less than expected in May to remain above the Bank of England's 2.0 percent target for a 20th consecutive month, official data showed on Tuesday.
The Office for National Statistics said consumer prices rose 0.6 percent on the month in May. That took the annual rate to 2.2 percent from 2.3 percent in April and the lowest since January 2008 -- and below forecasts of 2.0 percent.
Besides the anticipated upward effect from tax rises for alcohol and tobacco in this year's Budget, the chief upward influences were from rising prices of DVDs, televisions, clothing and footwear.
British inflation has remained remarkably sticky despite much lower energy and commodity costs compared to last year and an economic recession, perhaps due to the weakness of sterling.
But policymakers still expect inflation to fall sharply over the coming months and, as such, the figures are unlikely to alter expectations that monetary policy will remain loose for a considerable period of time.
The annual RPI measure of inflation, on which many wage deals are based and which includes housing costs, unexpectedly rose to -1.1 percent in May from -1.2 percent in April. Analysts had predicted a drop to -1.5 percent.
As well as being affected by the same upward pressures as the CPI measure, May's RPI was also boosted by housing costs as average mortgage interest rate payments rose slightly.
LONDON, June 16 - British consumer price inflation slowed much less than expected in May to remain above the Bank of England's 2.0 percent target for a 20th consecutive month, official data showed on Tuesday.
The Office for National Statistics said consumer prices rose 0.6 percent on the month in May. That took the annual rate to 2.2 percent from 2.3 percent in April and the lowest since January 2008 -- and below forecasts of 2.0 percent.
Besides the anticipated upward effect from tax rises for alcohol and tobacco in this year's Budget, the chief upward influences were from rising prices of DVDs, televisions, clothing and footwear.
British inflation has remained remarkably sticky despite much lower energy and commodity costs compared to last year and an economic recession, perhaps due to the weakness of sterling.
But policymakers still expect inflation to fall sharply over the coming months and, as such, the figures are unlikely to alter expectations that monetary policy will remain loose for a considerable period of time.
The annual RPI measure of inflation, on which many wage deals are based and which includes housing costs, unexpectedly rose to -1.1 percent in May from -1.2 percent in April. Analysts had predicted a drop to -1.5 percent.
As well as being affected by the same upward pressures as the CPI measure, May's RPI was also boosted by housing costs as average mortgage interest rate payments rose slightly.
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Is that good or bad news ?
No surprise really, it will be interesting to see the figures when the high oil price from last year works it's way out of the YoY figures, and lets not forget the rise in VAT that will come into effect after Christmas, seems all a bit contrived IMO, we have to keep IR's low at all costs, and we all know why that is don't we.
well the Pound has just rocketed from 1.6340 to 1.6420 against USD, and from 1.1780 to 1.1840 against the EUR......
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No doubt, this will lead to a reversal of the policy of QE. :rolleyes:
If you're interested, we've written a brief MSE News article on this
Deflation at -1.1% in May
Cheers
Dan
If you spot a rate change that we haven't already mentioned or added into articles or tips, Please send me a PM about it
Yipeeeee !!! :T:j
We have Inflation and you don't ..... nah nah ne nah nah !!!! :eek:
nah, go out and spend it dude !!
spend spend spend !!!!!
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then followed by the big 150bp cut in November 2008 and 100bp cut in December
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