UK inflation: Uptrend resumes – Lloyds

By FXStreet Analysts from Lloyds Bank explained that despite today’s increase in inflation in the United Kingdom, the gradient of the inflation uptrend is still likely to remain shallow.

Key Quotes:

“UK CPI inflation pushed higher in March, rising to an annual rate of 0.5%, above our and consensus expectation of a 0.4% y/y print. Most visibly, the ‘core’ rate (excluding energy, food, alcohol and tobacco) surged to 1.5% y/y from 1.2% y/y in February, seemingly beginning to reflect the impact of a weaker pound feeding through to import costs.”

“The rise in inflation in March comes despite the adverse effects of energy price movements. March saw a 1.4% rise in forecourt fuel prices, largely as expected, but the rise was much smaller than the 3.4% increase seen in March 2015, as such still pushing down on inflation.”

“Overall, today’s out turns do little to change our view that the climb in annual inflation towards 1% by the turn of the year is still likely to prove hesitant. To be sure, the recovery in oil prices continuing alongside the ongoing weakening of sterling is likely to provide incremental impetus. However, the pickup this month likely overstates these impacts. With measures of underlying unit costs softening …read more

Source:: FX Street