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British CPI Ticks Higher

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Today is a big day for British data releases with 14 concurrent data points just published. These predominantly relate to housing and inflation. The overview is that housing is softening while inflation is gathering pace.

Beginning with housing, the Mortgage Approvals number from British Bankers Association shows that 47.6k approvals were granted during the previous quarter, this is below expectations of 50k and also down on the previous figure of 50k. In relation to the cost of housing, the DCLG House Price shows a rise of 6.8% year on year to February compared to the prior reading of 5.5% this is healthy but also likely to feed into the inflation numbers.

Regarding inflation, Retail, Consumer and Producer Price Indices have all just been released simultaneously. The headline number from this set is the year on year Core Consumer Price Index, this is 1.7% which is a tenth higher than the January reading of 1.6%. The non-Core version of this figure is 1.7%, this is showing some drop from January’s number of 1.9% and as such will offer some relief in these figures to the Bank of England.

The Retail Price Index is also a little lower at 2.7% year on year, consensus estimates were for a figure of 2.6% in comparison to the previous months number of 2.8%.

Finally, the Producer Price Index, which has two key components, has fallen slightly in February. The year on year Input aspect of the PPI is -5.7%, compared to a revised January reading of -2.9%. The reduction in raw material costs will be welcomed particularly as the more relevant Core Output number is showing some signs of easing, posting 1.1% this month compared to 1.2% last month.

The Bank of England will be concerned about the moderate rise in the Consumer Price Index, however the various other factors are flat or easing, this will offer some breathing space to the Bank when it next discussed monetary policy.

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