Inflation down due to Easter break and low air fares

Currencies Direct May 18th 2016 - 2 minute read

Inflation down due to Easter break and low air fares
UK Inflation fell to 0.3% from 0.5%, the first time it’s fallen since September 2015, which was mainly due to the Easter break and lower air fares. Consumer Price Index (CPI) figures hit sterling back below key psychological levels, after starting the morning well. However, the Bank of England did state that it expects inflation to increase in the second half of 2016. Core CPI data (not including energy & food in the readings) also took a tumble, revealing a fragile 1.2% against market expectations of around 1.4%.

House Price Inflation leaps in March
After UK Stamp Duty law changes coming into effect in April for second homes, there was no surprise to see House Price Inflation numbers leap to 9% in March, as deals were thrashed out to beat the new Stamp Duty changes. Landlords borrowed figures which haven’t been seen since 2007, at just under £14bn. As wages and house prices fail to align in their rise at an equal level, there is potential to witness a housing crash. This is unless wages rise, or the housing market doesn’t cool back down to a realistic purchasing level.

US Consumer Prices make largest move since 2013
Surging energy prices in the US have helped US Consumer Prices (Month on Month) gain by its largest move since 2013 (0.4% Vs. 0.1% expected). This is the type of reading that Janet Yellen will be looking for, with regards to raising interest rates once more, which so far have fallen flat of expectations from January’s forecasts of 4 rate rises in 2016. Some even state a rate hike in June is not completely out of the question. The news that countered USD gains however, was Average Hourly Earnings, which fell 0.1% for April, taking the gloss off some very strong inflation numbers.

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