Articles - Schroders comment on UK inflation falling back into target


 European Economist, Azad Zangana, Schroders comments on UK inflation figures:

 "UK annual CPI inflation fell from 2.1% to 2% in December – returning to the Bank of England’s central target for the first time since November 2009. While we had forecast the fall, it came as a surprise for most investors as the consensus was for no change. The downside surprise was largely caused by the greater than expected fall in core inflation (excluding food and energy), which fell from 1.8% to 1.7%. However, much lower food price inflation (0.3% month on month in December 2013 compared to 1.2% in 2012) was the single biggest negative contributor to the change in the annual inflation rate.

 "There have been a number of factors that have helped lower inflation in recent months:
 • Some retailers have struggled over the festive period, and have cut prices more aggressively than usual.
 • The recent appreciation in sterling has helped lower the price of imported goods and services.
 • Fuel price inflation has been lower thanks to stable global oil prices.

 "The latest set of data is the first to include the price rises in household energy bills, and as the increases were greater than those in 2012, the sector made an upward contribution. However, if the energy companies are true to their word, there we could see a slight reversal in the Spring, as the government have eased rules on the energy suppliers to raise green energy related charges.

 "Looking ahead, we expect the CPI inflation rate to fall further to 1.9% over the coming months, but then to start rising at the end of Spring on the back of rising economic activity, but also as lower food and energy prices in 2013 come out of the annual comparison.

 "With regards to the Bank of England, having inflation back at 2% along with the weaker than expected production and manufacturing data helps reduce the pressure to consider a rise in interest rates – which markets are expecting by the end of the year."
 
  

Back to Index


Similar News to this Story

There is a need to complicate, our puts are short
Corporate bond spreads have continued to tighten, leaving substantially less upside in public IG than before. The US market recently hit the lowest
Targeted pensions support takes shape in FCAs plans
As the Financial Conduct Authority (FCA) sets out its strategic priorities for 2025/26 – and confirms Nikhil Rathi’s reappointment as Chief Executive
Five key questions the Insurance C-Suite must answer now
The insurance industry continues to evolve. 2025 has and – will continue to – bring with it an array of challenges and opportunities that demand strat

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.