UK Inflation at its highest since the official series began in 1997
Yesterday's data showed that Britain's inflation rate accelerated faster than expected to 3% in December, the highest since comparable records began in 1997 when the Labour government once again moved the goal posts.
The figures go some way to explaining why the Bank of England raised interest rates last week particularly as the Retail Price Index measure, the basis for most wage settlements rose to its highest in 15 years. The BoE targets consumer price inflation at 2% and is required to write an explanatory letter to the government should it deviate more than one percent from this level.
The Office for National Statistics said consumer prices rose 0.6% on the month in December, lifting the annual rate to 3%. Inflation has now been above the BoE target since May 06 giving the currency markets further reason to buy the pound.
The ONS said the biggest upward effect on prices in December came from transport costs which were boosted by rising petrol prices and a fuel duty increase announced by Gordon Brown in his Pre-Budget Report. Retail Price inflation rose to 4.4%, the highest since December 1991.
In other news yesterday, sentiment among German investors improved more than expected in January after the release of the ZEW economic research institute showed a reading of -3.6 against expectations of -11.5 and a December number of -19.
The better than expected number seems to have been fuelled by good economic data from the United States and talk that the VAT rise won't harm the economy. It should however be noted that this number is still well below the long term average of 34 and its temporary high of 71 in January 2006.
Today is another important day for economic releases both sides of the Atlantic with Average earnings and Unemployment from the U.K and PPI, Industrial Production and the Fed's Beige Book all out later today in the States.
UK Unemployment in particular will be closely watched after the huge decline in full-time employment in the last three months was the sharpest fall since the last recession, but was offset by a rise in part-time employment. If this trend continues this is likely to subdue consumption.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The figures go some way to explaining why the Bank of England raised interest rates last week particularly as the Retail Price Index measure, the basis for most wage settlements rose to its highest in 15 years. The BoE targets consumer price inflation at 2% and is required to write an explanatory letter to the government should it deviate more than one percent from this level.
The Office for National Statistics said consumer prices rose 0.6% on the month in December, lifting the annual rate to 3%. Inflation has now been above the BoE target since May 06 giving the currency markets further reason to buy the pound.
The ONS said the biggest upward effect on prices in December came from transport costs which were boosted by rising petrol prices and a fuel duty increase announced by Gordon Brown in his Pre-Budget Report. Retail Price inflation rose to 4.4%, the highest since December 1991.
In other news yesterday, sentiment among German investors improved more than expected in January after the release of the ZEW economic research institute showed a reading of -3.6 against expectations of -11.5 and a December number of -19.
The better than expected number seems to have been fuelled by good economic data from the United States and talk that the VAT rise won't harm the economy. It should however be noted that this number is still well below the long term average of 34 and its temporary high of 71 in January 2006.
Today is another important day for economic releases both sides of the Atlantic with Average earnings and Unemployment from the U.K and PPI, Industrial Production and the Fed's Beige Book all out later today in the States.
UK Unemployment in particular will be closely watched after the huge decline in full-time employment in the last three months was the sharpest fall since the last recession, but was offset by a rise in part-time employment. If this trend continues this is likely to subdue consumption.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Drs Search @ 10:17 AM
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