UK in­fla­tion rate rises to high­est in a year on mo­tor fuel

The Pak Banker - - BUSINESS -

LON­DON: U.K. in­fla­tion climbed to its high­est in a year in Jan­uary, driven by mo­tor fu­els, food and cloth­ing. Con­sumer prices rose an an­nual 0.3 per­cent fol­low­ing a 0.2 per­cent gain in De­cem­ber, in line with the me­dian fore­cast of econ­o­mists in a Bloomberg sur­vey. Core in­fla­tion, which ex­cludes volatile food and en­ergy prices, slowed to 1.2 per­cent from 1.4 per­cent, the fig­ures from the Of­fice for Na­tional Sta­tis­tics in Lon­don show. In­fla­tion re­mains well below the Bank of Eng­land's 2 per­cent tar­get. With oil prices re­main­ing near a 12-year low and pay pres­sures weak­en­ing, of­fi­cials say that the econ­omy doesn't yet war­rant a rate in­crease from a record-low 0.5 per­cent. Cen­tral to the out­look for rates is pay growth, which has come off the boil in re­cent months de­spite un­em­ploy­ment reach­ing a decade low. The sta­tis­tics of­fice will re­port data on jobs and wages on Wed­nes­day. The main driver be­hind the pickup in in­fla­tion last month was mo­tor fuel, which fell less than a year ear­lier. Th­ese pres­sures were par­tially off­set by air fares, which fell 36 per­cent, more than they did a year ago, fol­low­ing an up­ward surge in De­cem­ber. The pound gained af­ter the re­port and was trad­ing at $1.4486 as of 9:47 a.m. in Lon­don, up 0.4 per­cent from Mon­day. In their Fe­bru­ary in­fla­tion re­port, BOE of­fi­cials said they see in­fla­tion at 1.2 per­cent in the first quar­ter of next year, down from a pro­jec­tion of 1.5 per­cent in Novem­ber. On the month, con­sumer prices fell 0.8 per­cent, with core prices de­clin­ing 1 per­cent. Sep­a­rate fig­ures show pro­ducer prices fall­ing 0.1 per­cent in Jan­uary as in­put costs de­clined 0.7 per­cent.

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