UK Inflation Remains Stable At 3%
Inflation in the United Kingdom remained in January as the pressure of auto fuel and food prices was offset by upward effect from recreational and cultural goods.
Inflation came in at 3 percent in January, the same rate as in December, the Office for National Statistics reported Tuesday. Inflation is forecast to slow to 2.9 per cent.
But the core inflation that excludes energy, food, alcoholic beverages and tobacco, accelerated to 2.7 percent from 2.5 percent in December, which was also above the expected 2.6%.
The Bank of England last week said that monetary policy would need to be tightened a little earlier and a little stronger than expected.
The Central Bank predicts that inflation will remain near 3 percent in the first quarter. Nevertheless, it is expected to slow as the effects of the strong decline of the pound of the annual comparison.
The declining inflation will pave the way for a bit of a revival of growth this year to hike the BoE, the interest rates three times in the year 2018, more than the markets, Paul Hollingsworth, economist at Capital Economics, said.
Inflation, including owner-occupiers’ housing costs, which held steady in January at 2.7 percent.
On a monthly basis, overall consumer prices fell by 0.5 percent compared to expectations of a 0.6 percent decline.
In a separate communique, the ONS producer said prices grew at the slowest pace in more than a year in January.
Output price inflation relaxes to 2.8 percent in January, the weakest since November of 2016 from 3.3 percent a month ago. The rate was expected to moderate to 3 percent.
Similarly, input price inflation slowed to 4.7 percent from 5.4 percent in the previous month. That was the slowest rise since July of 2016. The prices were forecasted to gain 4.1 percent.
Month-on-month, producer prices rose slightly by 0.1 per cent and input prices rose by 0.7 per cent.