Forex Pros – Consumer price inflation in the U.K. was unchanged in May, hovering at the highest level since September 2008, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said that the rate of consumer price inflation held steady at 4.5% in April, broadly in line with market expectations.
The rate of inflation was double 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 largest downward pressure to the change in CPI inflation came from transport services. The largest offsetting upward pressure to the change in CPI inflation came from food and non-alcoholic beverages where prices, overall, rose by 1.3% between April and May.
Core CPI, which excludes food, energy, alcohol, and tobacco costs fell more-than-expected in May, increasing by a seasonally adjusted 3.3%, after rising by 3.7% in April. Economists had expected U.K. core CPI to increase by 3.5% in May.
The retail price index held steady at 5.2% in May, confounding expectations for a 5.3% increase.
Following the release of that data, the pound was up against the U.S. dollar, with GBP/USD rising 0.24% to trade at 1.6413.
Meanwhile, European stock markets were broadly higher. The FTSE 100 gained 0.55%, the EURO STOXX 50 jumped 1.25%, France’s CAC 40 rose 1%, while Germany’s DAX rallied 1.5%.
ForexPros.com
