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UK Inflation Sharply Higher

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UK Inflation Sharply Higher

Inflation in the UK has risen beyond expectations in the last month and is now in line with the Bank of England’s (BoE) target rate. The year on year Core Consumer Price Index has jumped 40 basis points and is now reading at 2.0%, this is the long term target of the BoE’s Monetary Policy committee, March’s reading was 1.6% and expectations for April were for an increase to 1.8%.

The non-Core CPI however is short of the 2.0% benchmark at 1.8% for April year on year, this follows a rise to 1.6% for March and comes in slightly ahead of the market expectation for a 1.7% reading. Month on month the reading is for 0.4% price growth compared to 0.2% the previous month and ahead of the market expected 0.3%.

Also announced this morning was the DCLG House Price Index, in a welcome sign for Britain’s overheating property market this registered a fall in April to a 8.0% year on year figure. March showed 9.1% annual price growth and markets had expected this pace to accelerate to 10.7% in April.

On the manufacturing side of the economy there was also an update on the Producer Price Indices (PPI) this morning. These non-seasonally adjusted numbers predominantly registered falls in producer prices on the month. The exception being the year on year PPI number for Inputs, this has picked up to -5.5% in April from a -6.3% reading in March, market expectations were for a -4.9% level. The month on month PPI Input figure was -1.1%, this was down on the prior reading of -0.6% and lower than the expected -0.2% this month.

The PPI Output numbers also registered lower during the month of April. Year on year PPI Core Output is now reading at 1.0% growth compared with the 1.1% achieved in March and directly in line with 1.0% market anticipated number. Month on month this reading is 0.0%, down from 0.2% in March and below the 0.1% expected by the market.

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