UK Inflation Data For August A Mixed Bag

UK Consumer Price Index (AUG)
(MoM) (YoY) (Core)
Actual: 0.4% 1.8% 1.8%
Expected: 0.4% 1.9% 1.8%
Previous: -0.6% 1.9% 1.7%

UK Consumer Price Index (AUG)
(MoM) (YoY) (Core)
Actual: 0.6% 4.1% 2.7%
Expected: 0.5% 4.0% 2.6%
Previous: -0.6% 3.8% 2.7%
The August inflation data for the UK was rather mixed. Whereas the Retail Price Index data was printing results that were somewhat better than the market’s forecasts, the more closely watched Consumer Price Index details were more balanced. The RPI reported a 0.6 percent increase in inflation pressures last month that helped put the year-over-year figure on a heartier than expected rebound. The annual gauge recovered from a nine-month low 3.8 percent pace with a 4.1 percent figure that is still below the high’s seen over the first two quarters of the year. At the same time, the CPI met its consensus for a 0.4 percent increase over the month, which in turn helped boost the core inflation report back up to a 1.8 percent rate of expansion. On the other hand, the year-over-year headline figure failed to hold its ground. Ticking down to a 30-month low, 1.8 percent rate of annual, frontline price growth, the inflation report highlights the fact that inflation is standing below 2.0 percent.
For a more in depth look at the inflation data, there were few declines among the sector breakdown For the month, only a 0.4 percent decline in miscellaneous goods and a 0.3 percent drop in housing prices weighed on the indicator. Alternatively, the 2.5 percent jump in communication prices and 1.4 percent increase in the value of clothing goods led a broad improvement across the economy.
In the minute after the inflation report hit the wires, the pound dropped modestly against the US currency. A 30 point decline was an extension of an earlier turn. This data is relatively in line and a greater GBPUSD reaction will likely be put under wraps as the market positions ahead of the FOMC rate decision.