- UK consumer prices increase at a 1.8% annualized rate in January versus 1.6% expected.
- Much of the gain was attributed to a 4.7% increase in fuel prices in January as compared to last year.
- House prices increase 2.2% annually in January versus a lower 1.7% in December.
- GBP/USD dropped from a daily high of 1.3023 to a low of 1.2906 on Wednesday.
United Kingdom’s Office for National Statistics (ONS) announced the Consumer Price Index (CPI) report on Wednesday. The index hinted at UK’s inflation to have increased sharply in January to record a new 6-month high. The rise in CPI, as per the experts, was attributed to smaller than usual decline in terms of airfares and higher prices for petrol in January.
Consumer prices increase at a 1.8% annualized rate in January that was significantly higher than December’s 1.3%. January reading, as per the Official for National Statistics, printed close to BoE’s (Bank of England) annual target of 2% for inflation. In a previous estimate, analysts had expected a 1.6% annualized growth rate in CPI last month.
Wednesday Reading Records Inflation Close To The BoE’s Target Of 2% Annually
In comparison with the historical standards, inflation in the United Kingdom remained modest. January’s data, however, did hint at a stronger than expected squeeze in terms of household budgets.
In its policy meeting in January, the Bank of England forecast that the annual inflation in the UK is likely to keep under the target of a 2% annualized growth rate in 2020. In Q3, the bank added, consumer prices may register an increase as weak as 1.2%.
The ONS further commented on Tuesday that December marked the sharpest annual rate for the increase in house prices in the United Kingdom. Data from the UK’s house market suggests strong signs of recovery in consumer confidence following PM Johnson’s victory in December 12th general election.
Wednesday’s data also declared that fuel prices were 4.7% higher in January as compared to last year. Fuel prices boasted the sharpest increase last month since November 2018. Excluding the volatile components like alcohol, fuel, tobacco, energy, the core inflation in the UK climbed to 1.6% in January versus December’s 1.4%. The data also highlighted that the upcoming months may continue to weigh heavily on consumer prices in the UK.
House Prices Increase 2.2% Annually In December Versus A Lower 1.7% In November
Costs for raw materials used in the manufacturing sector were 2.1% up in January that registered the sharpest increase since last April. Analysts, on the other hand, had expected a 0.1% decline in January.
On the house prices front, the increase was reported at 2.2% annually in December versus a much lower 1.7% in November. The reading was branded the most optimistic since November 2018.
Despite the optimism of the consumer price index, GBP/USD failed to perform well in the forex market on Wednesday. The currency pair dropped from a daily high of 1.3023 to a low of 1.2906 towards the end of the day where it is currently settling.