UK Inflation Remains Stable At 3%

UK Inflation Remains Stable At 3%

For the 13th consecutive month since January 2017, Consumer Price Index, CPI, dropped to about 15.13 per cent in January 2018, the National Bureau of Statistics, NBS, said in its latest Inflation Report.

That sparked fears that inflation - and interest rates - are on the move higher, a trend shift that sparked the market turbulence that has ensued in recent weeks.

The steep increase was driven by a surge in ticket prices for museums and zoos, where inflation surged from 1.4pc in the 12 months to December to 5.3pc in January.

Economists surveyed by The Wall Street Journal had expected CPI to rise by 0.4% and core prices to increase by 0.2%.

"Inflation's now been above target for 12 straight months".

The two main USA stock indexes endured wild swings last week on concerns that inflation would spur higher interest rates more quickly, boosting borrowing costs for companies.

Mr Brettell said it now looks like the next rise "may well happen in May".

The Bank of England last week said the monetary policy would need to be tightened somewhat earlier and by a somewhat greater degree than anticipated.

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While Sheets said he wouldn't raise his outlook for the path of inflation, the report "gives me increased confidence that we are in a place where inflation is likely to be gradually rising more or less in line with the Federal Reserve's forecast and consistent with an economy where we are seeing diminished slack, strengthening labor markets, solid growth".

At the pumps, petrol prices rose by 1.1p per litre on the month to 121p per litre, while diesel rose 1p to 124.5p per litre.

Other items contributing to the gain in CPI included rents and owners' equivalent rent, which both rose 0.3 percent from December; medical care, up 0.4 percent; and motor vehicle insurance, which advanced 1.3 percent, the most since 2001.

Against the euro, the pound was trading flat at 1.12 euros.

On a monthly basis, overall consumer prices fell 0.5 percent compared to expectations of 0.6 percent drop. The rise in core inflation, which excludes food, energy, alcohol and tobacco, from 2.5 to 2.7 per cent, put the Bank of England on course for a rise in interest rates in May.

US retail sales dropped 0.3 percent in January, losing anticipated gains from December 2017.

Gasoline prices rose 5.7% in the month and fuel oil costs were up 9.5% after very cold weather in the eastern U.S. Apparel prices were up 1.7% in the month.

Chris Williamson, chief business economist at IHS Markit, said inflation is likely to remain "stubbornly high for some time to come", but warned that an interest rate hike should not be taken for granted. Powell, speaking Tuesday at his ceremonial swearing-in, suggested that the central bank would push ahead with gradual interest-rate increases, and that officials "remain alert to any developing risks to financial stability".

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