UK: Overall inflation remains low – Danske

By FXStreet According to analysts from Danske Bank, today inflation data from the United Kingdom showed that inflation remains low. They expected that tomorrow the employment report will show a decline in the 3-month unemployment rate and a modest increase in earnings.

Key Quotes:

“UK CPI inflation increased to 0.3% y/y in January 2016 from 0.2% y/y in December 2015 (Danske Bank: 0.4% y/y, consensus: 0.3% y/y). Core inflation declined to 1.2% in January from 1.4% y/y in December. Both CPI inflation and CPI core inflation are expected to remain subdued in 2016 due to a combination of the past appreciation of GBP and the low commodity prices.”

“Although the negative contributions from the ‘Non-energy industrial goods’, ‘Food, Alcoholic beverages and Tobacco’ and ‘Energy’ all declined in January, ‘Services’ remain the only factor that is contributing positively to headline inflation.”

“Services inflation, which to a larger extent is domestically generated, was only 2.3% y/y in January, only slightly above the 2% target. Deflation in other components implies that overall inflation remains low.”

“The Bank of England has made it clear that it is definitely not ‘Fed light’ and that it is in no hurry to hike rates. There are many reasons for the BoE …read more

Source:: FX Street