Last month’s flat reading in the Consumer Price Index in the USA was the weakest since February and followed two straight monthly increases of 0.2 per cent.
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July’s inflation numbers were driven by increasing transport prices, the cost of alcohol and tobacco, as well as food.
Economists expect United Kingdom inflation data to be one of the most scrutinised releases over the course of the coming year, as observers try to understand the economic impact of Brexit.
The rise in the consumer price index during the previous four months was halted by a 4.7 percent drop in gasoline prices in July, which offset modest increases in other goods and services, the Labor Department said Tuesday.
The easing of inflation pressures seen in the consumer-price index, along with weak economic-output readings for the first half of the year, reinforces the argument of some officials to wait on a rate increase.
Energy costs fell 1.6 per cent from a month earlier, the first drop in five months, while food prices were little changed.
The wholesale price inflation for food articles quickened to 11.82 percent in July from 8.18 percent in the preceding month.
Barclays noted that while CPI was marginally higher than City expectations, it was in line with the Bank of England staff forecast as at the August 2016 Inflation Report.
“Sterling’s depreciation ensured that pump prices rose by 0.7% month-to-month even though dollar oil prices declined”, he said.
Corfe said that combined with stagnant pay growth, the CEBR expected real, inflation-adjusted, employee earnings to decline by 0.1% in 2017, after rising by 2.4% in 2015 and 1.5% this year.
The ONS also published a report on inflation measured by the Producer Price Index, tracking the “price of goods bought and sold by United Kingdom manufacturers” as well as manufacturing costs.
He believes inflation will hit 3pc in late 2017 and that this might stop the Bank of England from pumping more money into the economy.
Fed policy makers are looking for modestly firmer inflation readings, coupled with low unemployment, when the considering whether to raise the central bank’s benchmark interest rate.
A gauge of United Kingdom inflation expectations climbed to its highest level of 2016, as the nation’s Brexit decision and a slump in sterling helped push retail prices up in July faster than analysts had forecast.
Earlier this month, the Bank of England’s Monetary Policy Committee cut United Kingdom interest rates for the first time since 2009, from 0.5 per cent to 0.25 per cent.
However, mining stocks outperformed to rise in spite of the weaker market, with Antofagasta surging 8.7 percent after posting an increase in mid-year profits. “On the retail front, we continue to expect CPI inflation to broadly meet RBI’s projected trajectory, averaging 5.1% for FY17”.
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“In the aftermath of a significant deterioration in the exchange rate following the European Union referendum there is an understandable focus on the extent and speed of pass-through to inflation”, said Sam Hill, Royal Bank of Canada’s (RCB) senior economist in London.
