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19 May 2015
UK CPI slips into negative zone, BoE rate hike unlikely in 2015 – TDS
FXStreet (Barcelona) - Reviewing the UK inflation data release, the TD Securities Team note that the -0.1%yoy print suggests the slower pick in inflationary pressures will thwart any rate hike chances by the BoE this year.
Key Quotes
“UK CPI slipped from flat Y/Y to –0.1% Y/Y in April (consensus was looking for flat), its first time in negative territory since 1960.”
“The downside surprise here came from core CPI, which slipped 0.2ppts lower to 0.8% Y/Y, also reaching its lowest level since 2001.”
“While fuel prices are subtracting about 0.5ppts from headline CPI right now, the bigger story for April was probably services inflation, which fell to a new all-time low (going back to 1988) of only 2.1% Y/Y, despite the pick-up in wages and the closing output gap, two factors that are usually correlated with services prices. This supports the idea that the BoE will not likely be entertaining rate hikes this year as inflationary pressures are very slow to pick up again.”
Key Quotes
“UK CPI slipped from flat Y/Y to –0.1% Y/Y in April (consensus was looking for flat), its first time in negative territory since 1960.”
“The downside surprise here came from core CPI, which slipped 0.2ppts lower to 0.8% Y/Y, also reaching its lowest level since 2001.”
“While fuel prices are subtracting about 0.5ppts from headline CPI right now, the bigger story for April was probably services inflation, which fell to a new all-time low (going back to 1988) of only 2.1% Y/Y, despite the pick-up in wages and the closing output gap, two factors that are usually correlated with services prices. This supports the idea that the BoE will not likely be entertaining rate hikes this year as inflationary pressures are very slow to pick up again.”