The latest UK CPI release unexpectedly remained flat at 3.0% y/y against consensus forecasts for another rise. The data will come as a pleasant relief to the BOE who themselves projected an increase to 3.2% in today’s number. With the figure not exceeding the 1.0% parameter above the bank’s 2% threshold that would require the ignominy of an open letter to the Chancellor it is safe to say Governor Carney will be quietly pleased with the data point and hope that the rise in inflationary pressures have begun to wane.
With the core reading also coming in inline with the prior reading when a rise was forecast there are growing signs that a high-water mark for UK inflation may have been reached. The pound has reacted negatively to the release, falling back below the 1.31 handle against the US dollar and trading not far from its lowest level in 2 months.
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