Published: Wed, February 14, 2018
Markets | By Erika Turner

Robust IIP data points to manufacturing revival

Robust IIP data points to manufacturing revival

United Kingdom inflation in January was higher that the market expected and keeps the prospect of a Bank of England interest rate hike in play over the coming months.

The Bureau of Labor Statistics announced the Consumer Price Index (CPI) inflation was 0.2 percent higher for the month of January and the year to date than economists' originally projected.

But Ben Brettell, senior economist at Hargreaves Lansdown, says most United Kingdom household budgets have been given little slack from today's ONS numbers - inflation has been above target for 12 straight months, he reminds.

The increase in the core CPI brought the three-month annualized gain to 2.9 percent, the fastest since 2011, according to data compiled by Bloomberg.

Ben Brettell, senior economist at Hargreaves Lansdown says: 'This adds further weight to the case for higher interest rates sooner rather than later.

Gas prices have risen a bit more this month: On Wednesday, the nationwide average gas price was $2.56 a gallon, up three cents from a month earlier.

Prices have been pushed higher since the Brexit referendum in June 2016 resulted in a collapse in the value of the pound, making imports more expensive. Inflation in the vegetable segment slowed to 26.97 per cent. Prices of fruits, too, rose at a lower pace of 6.24 per cent last month.

"However, the cost of entry to attractions such as zoos and gardens fell more slowly", he explained, as ticket prices tend to fall at the start of the year. With our pay packets lagging price rises, we're feeling progressively poorer as each month rolls by and this inevitably means we'll spend less.

Premier John Horgan announces another minimum wage increase
The minimum wage in B.C. was not increased between 2001 and 2010, before rising by $2.25 to $10.25 by 2012. Commenting on the plight of minimum wage workers he said: "They shouldn't have to rely on foodbanks".

Song said he expects core CPI to rise 0.2 percent, or 1.7 percent year over year.

The Euro has also traded 0.11% lower against the British pound prior to the release of the inflation data while the greenback was mostly steady due to the $1 trillion infrastructure plan outlook from U.S. President Donald Trump.

That followed price rises hitting their highest since March 2012 in November at 3.1 per cent.

Airfares, which usually fall after the holidays, also dropped at a slower rate, down just 33.2% month on month, compared to a 36% drop a year earlier.

The Consumer Price Index rose 0.5 percent last month against projections of a 0.3 percent increase.

He said apart from oil prices, the monsoon rains would be the key factor for inflation. The market shed more than $1 trillion in market capitalization in the days of trading this month as investors, for the first time in almost a decade, believe that central banks around the world will pull back on their recession-era easy money policies and raise interest rates to ensure that rapidly growing economies don't run too hot.

Indicating economic revival, India's industrial production grew by 7.1 per cent in December and inflation fell from 17-month high to 5.07 percent in January easing pressure on RBI to increase interest rates.

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