UK annualized CPI beats estimates with 0.2% in August, GBP/USD stays below 1.29


  • UK CPI rises 0.2% YoY in Aug vs. 0% expected.
  • Monthly UK CPI arrives at -0.4% in Aug vs. -0.6% expected.
  • GBP/USD remains capped below 1.2900 on the data release.

The UK Consumer Prices Index (CPI) 12-month rate came in at +0.2% in August when compared to +1.0% booked in July while beating expectations of a 0% print, the UK Office for National Statistics (ONS) reported on Wednesday. 

Meanwhile, the core inflation gauge (excluding volatile food and energy items) arrived at +0.9% YoY last month versus +1.8% booked in July while beating the consensus forecast of +0.6%.

The monthly figures showed that the UK consumer prices arrived at -0.4% in Aug vs. -0.6% expectations and +0.4% last.

Main points (via ONS):

“The largest contribution to the CPIH 12-month inflation rate in August 2020 came from recreation and culture (0.35 percentage points).

Falling prices in restaurants and cafes, arising from the Eat Out to Help Out Scheme, resulted in the largest downward contribution (0.44 percentage points) to the change in the CPIH 12-month inflation rate between July and August 2020.

Other smaller downward contributions came from falling air fares and clothing prices rising by less between July and August 2020 than between the same two months a year ago.

The largest, partially offsetting, upward contributions came from games, toys and hobbies, accommodation services, road transport services and second-hand cars.”

FX implications:

Following the upbeat UK CPI numbers, the GBP/USD  ticked a few pips higher but remained below the 1.2900, having faced rejection at 1.2915.

The spot was last seen trading at 1.2890, modestly flat on the day.

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