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UK inflation falls less than expected in Jan
Source: Agencies |
February 17, 2009, Tuesday
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BRITISH inflation fell by much less than expected in January, official data showed today, but the surprisingly strong figures should not stand in the way of further monetary policy easing from the Bank of England.
The Office for National Statistics said consumer prices fell 0.7 percent on the month. That took the annual rate down to 3.0 percent from 3.1 percent in December, above forecasts for a rate of 2.7 percent and the BoE's two percent target.
Sterling jumped after the stronger than forecast figures.
"Very disappointing," said David Page, an economist at Investec. "Inflation is not coming back (down) as quickly as we had anticipated and suggests there is still some lingering pressure."
Retail price inflation, on which most wage deals are based, fell to just 0.1 percent -- the lowest annual rate since March 1960 -- as interest rates have fallen sharply since October.
The BoE still expects headline inflation, which excludes mortgage payments, to fall sharply in the coming months because commodity prices are sliding and demand is fading fast as Britain languishes in its first recession since the early 1990s.
The main upward effects on consumer prices in January appeared to be a result of retailers not cutting prices by as much as usual in the January sales because they had already slashed prices in the run up to Christmas.
Alcohol prices also had an upward impact, rising at their fastest annual pace since March 2001 with widespread increases across wine, beer and spirits.
The Office for National Statistics said consumer prices fell 0.7 percent on the month. That took the annual rate down to 3.0 percent from 3.1 percent in December, above forecasts for a rate of 2.7 percent and the BoE's two percent target.
Sterling jumped after the stronger than forecast figures.
"Very disappointing," said David Page, an economist at Investec. "Inflation is not coming back (down) as quickly as we had anticipated and suggests there is still some lingering pressure."
Retail price inflation, on which most wage deals are based, fell to just 0.1 percent -- the lowest annual rate since March 1960 -- as interest rates have fallen sharply since October.
The BoE still expects headline inflation, which excludes mortgage payments, to fall sharply in the coming months because commodity prices are sliding and demand is fading fast as Britain languishes in its first recession since the early 1990s.
The main upward effects on consumer prices in January appeared to be a result of retailers not cutting prices by as much as usual in the January sales because they had already slashed prices in the run up to Christmas.
Alcohol prices also had an upward impact, rising at their fastest annual pace since March 2001 with widespread increases across wine, beer and spirits.
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