Tag Archive: CPI

  1. June CPI inflation figures – maybe interest rates will remain

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    The CPI for June showed prices flat over the month, whereas prices rose by 0.2% between May 2016 and June 2016. The consensus had been for a 2.9% annual rate, so the 0.3% drop to 2.6% surprised the markets. The CPI/RPI gap widened to 0.9%, with the RPI annual rate now standing at 3.5% (down 0.2% on May’s annual figure). Over the month alone, the RPI was up 0.2%.

    The Office for National Statistics (ONS) newly favoured CPIH index was down 0.1% to 2.6% for the year, its first decline since April 2016. The ONS put the fall down to a variety of factors:


    Transport: The largest downward effect came from transport, in particular motor fuels. Fuel prices fell by 1.1% between May and June 2017, the fourth successive month of price decreases. Over the same period last year, fuel prices rose by 2.2%.

    Recreational and culture: This category also made a substantial downward contribution to annual inflation with overall prices dropping by 0.1% between May and June 2017, compared with a rise of 0.6% a year ago. The move downward partially reverses the upward pressure seen between April and May 2017 and comes from a variety of areas, principally data processing equipment, cultural services, and games, toys and hobbies.


    Furniture and household goods: This category gave largest upward contribution with overall prices up by 0.5% compared with a 0.3% fall between May and June 2016. The upward effect came from prices for a variety of bedroom, kitchen and lounge furniture.

    Core CPI inflation (CPI excluding energy, food, alcohol and tobacco) was down 0.2% at an annual 2.4%. All twelve index components remain in positive annual territory, with the lowest pair (recreation and culture and communication) now +1.5%. Food and non-alcoholic beverage inflation is now running at +2.3%, against -1.1% at the end of 2016.  Goods inflation fell 0.3% to 2.6%, while services inflation decreased by 0.1% to 2.9%.

    Producer price inflation (PPI) eased again. The input PPI figure fell back from 12.2% in the year to May 2017 to 9.9% in the year to June 2017. Since the start of 2017 the input PPI annual rate has dropped by 10.0%, a reminder of its volatility. Output price (aka factory gate price) inflation fell 0.3% to 3.3%.

    The surprise drop annual CPI figure eases the pressure for an interest rate rise when the Bank of England’s Money Policy Committee meets in just over a fortnight’s time, Its announcement is due on 3 August, alongside publication of the latest Quarterly Inflation Report.

  2. The Spring Budget Background

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    A year ago, nobody – including Mr Osborne – expected the 2014 Budget to be set against such a relatively benign economic background for the UK. In March 2013 the talk was of a triple dip recession, as the country had just recorded a contraction of 0.3% in the final quarter of 2012.  Inflation, as measured by the February 2013 Consumer Prices Index (CPI), was running at 2.8% and had been above its 2% target since December 2009.  In Europe the latest round of the Eurozone crisis was taking place, with Cyprus becoming the fifth EU member to seek a bailout. All in all, it was not a pleasant economic backdrop against which to present another austerity-as-she-goes Budget that promised a further £100bn+ government deficit for the coming year. (more…)

  3. The Markets

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    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.