The Markets

Much like school children trying to capture the attention of someone they have a crush on, the economy sent lots of mixed signals last week.

The Consumer Prices Index (CPI) grew by 2.4% in the year to April 2013, down from 2.8% in March.  By far the largest downward contribution came from transport costs (notably motor fuels and air fares).  The only notable upward contribution came from price movements for food & non-alcoholic beverages.  This is the first time that the growth in inflation has slowed since Autumn 2012. Over the last six months, the CPI 12-month rate has been particularly stable.

CPIH, the new measure of consumer price inflation including owner occupiers’ housing costs, grew by 2.2% in the year to April 2013, down from 2.6% in March.  The slower growth in CPIH than CPI is due principally to owner occupiers’ housing costs increasing more slowly than overall inflation for other consumer goods and services in the year to April.

House price figures were also released.  In the 12 months to March 2013 UK house prices increased by 2.7%, up from a 1.9% increase in the 12 months to February 2013.  House price growth remains stable across most of the UK, although prices in London are increasing and prices in Northern Ireland are falling.

The year-on-year increase reflected growth of 3.0% in England and 1.2% in Wales, which were offset by declines of 1.7% in Scotland and 2.0% in Northern Ireland.  The annual house price increases in England were driven by a 7.6% rise in London and a 3.3% increase in the South East.

Stock markets remained undaunted by uncertain economic conditions and the prospect that U.K. quantitative easing may start and U.S. quantitative easing may end soon. The FTSE 100 and the FTSE All-Share Indices surged to new highs last week. Markets rallied across the pond, as well, with some major European stock indices reaching levels last seen five or more years ago, according to Reuters.