UK inflation at lowest since May 2000

Sterling was hurt by soft UK inflation data released on Tuesday. CPI fell to 0.5 percent year-on-year in December, the lowest in 15 years, since May 2000. The figure was down from 1 percent in November. Tumbling oil prices impacted consumer prices.

According to the Office for National Statistics (ONS), the month-on-month figure was lower than expected at 0.0 percent, so it was flat in December, following a 0.3 percent drop the month before. Economists had forecast a slight uptick of 0.1 percent.

The Bank of England has a 2 percent target inflation rate so since the December CPI rate is more than 1 percentage point below, it means the BoE Governor Mark Carney will have to write a letter to the government – to Chancellor of the Exchequer George Osborne – explaining why inflation is off target by this amount. The letter is expected to be published in mid-February.

The pound fell to a low of $1.5075 before steadying to break even on the day.
Many still expect the Bank of England to begin hiking interest rates later this year.

The post UK inflation at lowest since May 2000 appeared first on Forex Circles.

Source:: UK inflation at lowest since May 2000

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