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Moderate Easing In UK Inflation

James Boston
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Moderate Easing In UK Inflation

Britain’s inflation situation has remained largely stable according to the latest data for August released this morning. With the exception of a fall in producer prices and a rise in house prices, both of which were not unexpected, the key consumer sector is well in line with Bank of England targets. The headline Consumer Price Index (CPI) has ticked down a notch to read at 1.5% when measured on a year on year basis, this is exactly in line with market expectations and represents a slight easing from the 1.6% experienced in July. The month on month CPI figure also met expectations at 0.4% expansion, this represents a turnaround from the -0.3% contraction recorded in July. On ex food and energy Core CPI however has moved ahead to 1.9% year on year, this is up one tick from July’s 1.8% and there was no real expectation for this to change in August.

The UK’s retail sector continues to perform strongly, and although there is some moderate easing in the latest data the growth rates in the Retail Price Indices (RPI) still remain elevated. The key year on year RPI figure now stands at 2.4%, this has slightly fallen from July’s 2.5% reading but this moderation was fully anticipated by markets. Month on month the RPI has recorded growth of 0.4%, this level of expansion was expected following the minor contraction of -0.1% in July. The more stable core numbers are also largely in line with the general readings. Year on year the Core RPI has been reported as expanding 2.5%, an expected figure and down a point on the July reading of 2.6%. The month on month Core RPI data is now reading at 0.4% expansion as anticipated, this is a turnaround from July’s -0.1% contraction.

On the housing side there is was another surprisingly strong showing in August, July’s 10.2% growth in the DCLG House Price Index was expected to expand to 10.6% year on year, the final number however has just been announced as an 11.7% rise.

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