News Worms
News Worms

Retail inflation eases to 5.07% in January

Retail inflation eases to 5.07% in January

After the correction seen last week, with the S&P 500 down by more than 10 percent, investors are treading carefully as they wonder whether this could be a turning point for markets, which have hit new highs for most of the past year.

The retail inflation for January has eased down to 5.07 per cent from 5.21 per cent in December 2017, according to data released by the Central Statistics Office on Monday.

Economists were pencilling in a drop to 2.9%.

Inflation in January rose by more than economists had forecast, a report from the Bureau of Labor Statistics showed on Wednesday.

Recreation and culture costs rose by 3.3pc, the fastest rise in eight years.

"Inflation's now been above target for 12 straight months. It will also mean slightly higher interest rates than we've been used to", she said.

Mr Brettell said it now looks like the next rise "may well happen in May". It prompted a fall in the pound, making imported goods more expensive.

Inflation remained stubbornly static on Tuesday owing to the combination of rising oil prices and, more importantly, sustained sterling weakness.

Domestic pump prices of petrol and diesel rose sharply in January, reflecting lagged pass-through of the past increases in worldwide crude oil prices.

Every month, 10,534 informants spread across the country provide price data for the computation of the CPI and the market items now comprise of 740 goods and services regularly priced. Core consumer price inflation - excluding food, energy, alcohol and tobacco - rose to 2.7 per cent from 2.5 per cent.

Following the ONS announcement, sterling rose 0.3% against the U.S. dollar to $1.388, while the FTSE 100 was level at 7,175 points.

The British Pound lost ground following the mixed data prints, with GBP/USD slipping below the 1.3750 region, but the move was short-lived as the pair ended the day at 1.3791.

- U.K. Consumer Price Index (CPI) to Narrow to Annualized 2.9% from 3.0% in December.

"Any upside surprise today versus the consensus for a fall in the annual CPI will reinforce expectations of the BoE being more active in hiking rates", wrote MUFG's head of European market research, Derek Halpenny, in a note to clients.

Growth in the consumer durables segment continued to be sluggish, however, coming in at 0.86% in December, down from the 3.21% in the previous month.

The data about IIP will be announced for December 2017, while CPI data will be released for the month of January 2018.

IHS Markit's Chris Williamson said: "While the stickiness of inflation will make for itch-trigger fingers among rate-setters, the signs of the economy faltering faltering suggest there's a risk of a higher interest rate exacerbating a nascent slowdown".


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