UK In­fla­tion Slows in Fe­bru­ary as Brexit hit to Pound Fades

EME Outlook - - News -

Bri­tish in­fla­tion was weaker than ex­pected in Fe­bru­ary as the im­pact of the 2016 Brexit vote faded, eas­ing some of the squeeze on house­holds’ spend­ing power but do­ing lit­tle to change bets on a Bank of Eng­land rate rise in May this year.

Of­fi­cial data showed con­sumer prices rose by an an­nual 2.7 per­cent last month, the weak­est in­crease since July of last year and down from a rise of three per­cent in Jan­uary.

The fig­ure was slightly be­low the me­dian fore­cast of 2.8 per­cent in a Reuters poll of econ­o­mists.

Bri­tish in­fla­tion is run­ning at more than dou­ble the rate in Ger­many and

France. It is also higher than in the United States, where the Fed­eral Re­serve looks set to con­tinue its se­ries of in­ter­est rate hikes this week.

“This fall­back in in­fla­tion there­fore pro­vides lit­tle rea­son for the Bank of Eng­land to hold back from grad­u­ally rais­ing in­ter­est rates,” said An­drew Sen­tance, a for­mer BOE rate-set­ter who is now an eco­nomic ad­viser with ac­coun­tancy firm PWC.

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