UK inflation falls back closer to target
|According to the consumer price index, inflation in the UK has continued to decline with the reading for April coming in below forecast at 2.4%. The core reading which strips out volatile components such as the price of oil, is seen by many as a more accurate gauge of price pressure, and a print of 2.1% here suggests that it no longer running well above the 2% target.
Since peaking last November at 3.1% the headline CPI has been in a near constant state of decline as inflation falls back closer to the target as the positive price pressures created as a result of sterling's rapid depreciation following the Brexit vote has clearly diminished.
The data provides further evidence that the BoE were correct to hold off on a May hike, with inflation now looking likely to return to target without the need for any additional tightening of policy.
Eurozone recovery losing steam
The latest PMI data from the Eurozone has raised some pretty serious concerns as to the economic strength of the area with both the services and manufacturing readings missing forecasts. You have to go back to February 2017 to find a worse manufacturing number while
the flash services PMI print of 53.9 is the worst since last January’s release.
Looking on a regional basis it doesn’t appear any better with Germany and France, the two economic heavyweights of the bloc, seeing their combined PMIs fall to the slowest pace of growth in 20 months and 16 months respectively. This is particularly disconcerting given that the weakness seen in the last few months had been widely attributed to a cooling off after stellar growth in 2017, but today’s data suggests that growth is now tepid at best. The Euro has fallen to its lowest level of the year following the release, dipping below the 1.17 handle against the US dollar.
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