UK: Core CPI unchanged at 1.9% in October - ING
James Smith, Developed Markets Economist at ING, points out that the UK’s core CPI remained unchanged at 1.9% in October, although interestingly this is being propped up to some extent by higher recreation prices.
Key Quotes
“Admittedly, this is a category that contains some quite volatile items, but it also encompasses various goods that are fairly sensitive to fluctuations in the value of the pound - things like computers and TVs.”
“Now that the post-Brexit sterling decline is more-or-less reflected in prices, the rate of inflation for these goods should really be falling a bit faster. If we see a bit of a correction over the next 2-3 months, we could see core inflation dip a little lower to around 1.7%.”
“It's a similar story for the headline rate of inflation.”
“The noticeable rise in petrol prices since March has kept headline CPI sticky around 2.4%, despite a further 0.2% fall in food prices between September and October. However, as base effects kick-in, we'd expect CPI to trend back to 2% by the second quarter of next year.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
