- IHS Global Insight
British inflation climbed less than expected last month, extending the period the cost of living in the UK has been below the Bank of England's 2% target to 26 months. Prices rose 0.3% from a year earlier, according to the Office for National Statistics. Economists, however, had expected a 0.4% gain in February. Inflation has not been above 0.3% since December 2014 and last hit the central bank's target in December 2013. Most analysts expect inflation to stay around the mark for most of the spring, before gradually moving towards the end of the year to about 1%. The Office for Budget Responsibility now predicts the consumer price index to climb to 0.7% at year-end, compared with 1% estimated earlier. The OBR then predicts inflation to edge higher to an average of 1.6% in 2017. Meanwhile, core inflation, which excludes volatile food and fuel costs, came in line with expectations at 1.2%.
A separate report showed UK public sector net borrowing excluding banks rose to 7.1 billion pounds in February, more than expected. Overall in the fiscal year from April through February net borrowing dropped to 70.7 billion pounds. The OBR predicts net borrowing this year to come in at 72.2 billion pounds, slightly less than estimated in November.
© Dukascopy Bank SA