UK Inflation Eases More Than Forecast
March 20 2018 - 3:20AM
RTTF2
UK inflation eased more-than-expected to a 7-month low in
February, as the effects from the deterioration in pound after the
Brexit vote fades.
Consumer price inflation slowed more-than-expected to 2.7
percent from 3 percent in January, figures from the Office for
National Statistics revealed Tuesday.
This was the weakest figure since last July, when prices rose
2.6 percent. Economists had forecast an annual rate of 2.8
percent.
Underlying inflation that excludes energy, food, alcoholic
beverages and tobacco, eased to 2.4 percent from 2.7 percent in the
previous month. Core prices were expected to gain 2.5 percent.
On a monthly basis, overall consumer prices climbed 0.4 percent,
but slightly slower than the expected 0.5 percent.
"A small fall in petrol prices alongside food prices rising more
slowly than last year helped pull down inflation," ONS statistician
Phil Gooding said.
"Many of the early 2017 prices increases due to the previous
depreciation of the pound have started to work through the
system."
The decrease in inflation does not significantly diminish the
case for a near-term rate hike, Paul Hollingsworth, an economist at
Capital Economics, said. The timing of Easter could push inflation
back up a bit in March.
The Bank of England is widely expected to keep its key interest
rate unchanged at 0.50 percent at its monetary policy committee
meeting this week.
Another report from ONS showed that output price inflation
slowed to a more than one year low in February. Nonetheless, output
price inflation has been positive since July 2016.
Output prices grew 2.6 percent annually in February, the weakest
since November 2016, versus 2.8 percent rise a month ago.
On month, output prices remained flat after rising 0.1 percent
in January. Economists had forecast output prices to rise 0.1
percent from January and 2.6 percent from last year.
At the same time, input price inflation eased to 3.4 percent in
February from 4.5 percent in January.
On a monthly basis, input prices dropped 1.1 percent on month,
in contrast to previous month's 0.4 percent increase. Prices
declined for the first time since last August and was also the
biggest fall since January 2016.
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