Forex Pros – Consumer price inflation in the U.K. rose in line with expectations in January, jumping to the highest level since November 2008, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said that the rate of consumer price inflation rose broadly in line with expectations to a seasonally adjusted 4.0% in January, up from 3.7% in December.
The rate of inflation was significantly higher than the Bank of England’s 2.0% target. The BoE Governor is obliged to write to the Chancellor of the Exchequer every three months that inflation is more than a percentage point above or below its target.
According to the report, the main factors affecting CPI were an increase in the standard rate of Value Added Tax (VAT) to 20% and the continued increase in the price of crude oil.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose in line with expectations in January, increasing to a seasonally adjusted 3.0%, after rising 2.9% in December.
Following the release of the data, the pound was up against the U.S. dollar, with GBP/USD gaining 0.09% to hit 1.6055.
Meanwhile, European stock markets were broadly higher. The FTSE 100 eased up 0.05%, the EURO STOXX 50 jumped 0.58%, France’s CAC 40 gained 0.39%, and Germany’s DAX was up 0.23%.
ForexPros.com
