Industrial output picks up, retail inflation dips

Gladys Abbott
February 14, 2018

The increases were led by much higher clothing costs and more expensive auto insurance.

On Tuesday, the British pound rallied after reports of the inflation rate in Britain remaining close to a six-year high last month strengthening the investor hopes that the Bank of England would increase interest rates once again this coming May.

Tuesday's numbers showed consumer price inflation (CPI) held at an annual rate of 3.0 per cent in January, unchanged from the month before and above a consensus forecast of 2.9 per cent.

'Inflation was unchanged in January, as a smaller rise in motor fuel prices helped to a keep a lid on overall United Kingdom price growth.

Chris Williamson, chief business economist at IHS Markit, said a May rate rise was by no means a done deal and the Bank would want to see the economy's health improve to be sufficiently reassured that the economy is ready for another rise in borrowing costs.

Mr Brettell said it now looks like the next rise "may well happen in May".

The Bank of England (BoE) had expected inflation to fall back from 3% and in last week's monthly Monetary Policy Committee meeting the minutes said a rate rise would be needed "somewhat earlier" in order to return inflation to its 2% target.

It prompted a fall in the pound, making imported goods more expensive. Separate data released by the CSO showed industrial output growth rose 7.1% in December, slower than previous month's upwardly revised 8.4% but still higher than market expectations.

More news: William Byron fastest in Saturday's MENCS Daytona practice

Food inflation, as measured by the Consumer Food Price Index, rose to 4.70 per cent in January from 4.96 per cent in the previous month.

The main upward effect on prices came from a range of recreational and cultural goods and services, in particular, admissions to attractions such as zoos and gardens, for which prices fell by less than they did a year ago.

Petrol rose by 1.1p per litre on the month to 121p per litre, while diesel rose by 1p to 124.5p per litre.

Sterling jumped to as high as US$1.3924 after the data, up from US$1.3886 beforehand.

Jacob Deppe, head of trading at online trading platform, Infinox added: "Stubbornly high inflation in the months ahead will only strengthen the argument for a rate hike in May and possibly one, if not two, further rate hikes before the end of the year".

The Consumer Price Index probably increased 0.3 percent in January after gaining 0.2 percent in December, according to a Reuters survey of economists.

While Sheets said he wouldn't raise his outlook for the path of inflation, the report "gives me increased confidence that we are in a place where inflation is likely to be gradually rising more or less in line with the Federal Reserve's forecast and consistent with an economy where we are seeing diminished slack, strengthening labor markets, solid growth".

Retail inflation for January stood at 5.07% whereas food inflation grew at 4.58% which was at 4.85% a month earlier.

Other reports by LeisureTravelAid

Discuss This Article

FOLLOW OUR NEWSPAPER