- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- October 17, 2018
- No Comments
Sterling drops notably just after September consumer inflation data came in lower than expected. Headline CPI slowed to 2.4% yoy, down from 2.7% yoy and missed expectation of 2.8% yoy.
Core Inflation slowed to 1.9% yoy, down from 2.1% yoy and missed expectation of 2.1% yoy.
The ONS noted that “The largest downward contribution to the change in the came from food and non-alcoholic beverages, where prices fell by 0.1% between August and September 2018 compared with a rise of 0.8% between the same two months a year ago.
The main effects came from meat where prices fell, between August and September, this year but rose a year ago and from chocolate.
Also released, RPI slowed to 3.3% yoy versus prior 3.5% yoy and expectation of 3.5% yoy. PPI input rose to 10.3% yoy from 9.4% yoy. PPI output rose to 3.1% yoy from 2.9% yoy. PPI output core rose to 2.4% yoy from 2.2% yoy.
On Tuesday, the ONS said the basic wages of workers rose at their fastest pace in nearly a decade over the summer months.
That backed up the Bank of England’s view that a long period of weak pay increases is ending, and that it should raise interest rates in response.
The BoE expects inflation will drift down but will remain just above its 2 percent target in two years’ time as it gradually raises borrowing costs.