UK Inflation Slows More Than Expected

Consumer prices in Europe’s third largest economy have slowed 1.1% year end in September amid economists’ expectations of 1.3%, jeopardizing the central bank inflation trough of 1.0% at the end of the year as it currently reached a five-year low. For the month of September, prices were unchanged for the first time since records began in 1996. The breakdown of the report showed bills, food prices, restaurant and recreation to be the main contributors of the low inflation. Going forward, investors will be taking a close look at the U.S. data this week as earnings reports will provide a thorough outlook for whether a “V” shape recovery is indeed taking place. A dovish shift in policy may occur next month as suggested by many observers, however, as for now, the central bank will maintain its current stimulus programs until recovery is certain given the uncertainty of global events as stated by Prime Minister Gordon Brown yesterday.