- Bank of England
Data on the UK inflation left analysts dissatisfied, falling short of expectations and showing the first dip in seven months. The Consumer Price Index rose 0.3% on a yearly basis in April, while economists had forecast the rate to remain unchanged at 0.5% from the month before. Monthly consumer prices advanced 0.1%, repeatedly missing analyst expectations of 0.3%, as the measure revealed a drop from previous month's 0.4%. Removing the effects of such volatile costs as food and fuel, the core inflation rate showed a leap in the predicted direction, nonetheless falling behind the expected 1.4% with a staggering 1.2%, compared to a 1.5% the month before. James Tucker, the head of CPI at the ONS claimed the main driver for the unexpected drop in inflation was the 14.2% dip in air fares that had climbed the month before, emerging from Easter holidays. The 0.4% shrinkage in clothing prices was named as another major contributor to the cutback in inflation.
The BoE said that a rise in inflation can be anticipated later this year due to a weaker Pound that should cause imported goods to become more expensive. The central bank expects a 0.9% inflation gain in the final quarter of the year, leading to a further 1.3% advance over next year's first quarter. While the expectations do not reach as far as achieving the 2% inflation target this year, the BoE is positive that the upward trend will extend and the UK will arrive at its target by mid-2018.
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