Prior to the release of UK inflation data the Pound was heading toward a three week low against the Euro and was little changed against the US Dollar.
Economists forecast that the UK’s consumer-price inflation rate would hold at 2.8 per cent in March – above the Bank of England’s target of 2 per cent and the highest level since May 2012 – and the latest data from the Office for National Statistics has shown this estimation to be accurate.
Core inflation, on the other hand, unexpectedly rose from 2.3 per cent in February to 2.4 per cent in March.
The Pound Sterling Exchange Rate was in the region of 1.5284 against the US Dollar as of 10:37 am GMT
Inflation has now been above target since the close of 2009, and the squeeze on UK consumers could get worse before it starts getting better.
According to economist Howard Archer: ‘Inflation seems highly likely to rise modestly above 3 per cent during the second quarter and stay there for much of 2013. Several Monetary Policy Committee members may want to see evidence that underlying price pressures are broadly contained before approving further simulative action.’
When the BoE’s Monetary Policy Committee last met it chose to leave its bond-purchase plan unaltered. Minutes from the meeting are scheduled to be released tomorrow and will show whether the divide between those MPC members pushing for additional easing and those advocating no change is growing.
Meanwhile, producer price data showed a month-on-month core output price increase of 0.1 per cent and a year-on-year increase of 1.3 per cent. Input prices were up 0.4 per cent on the year but down 0.1 per cent on the month.
The Retail Prices Index went up to 3.3 per cent from 3.2 per cent.
In a separate report the Office for National Statistics revealed that UK house inflation eased from 2.2 per cent in January to 1.9 per cent in February.
After the UK data releases the Pound experienced mild fluctuations against its rivals, declining against the Euro and US Dollar.
Although investors are remaining cautious in light of the risk-off market inspired by China’s lower-than-forecast GDP data, recent disappointing US news and the shocking Boston bombings, Sterling could experience additional movement as a result of US inflation figures – due for release at 13:30 GMT.
Sterling could also recoup losses sustained against the Euro if the common currency declines in response to the news that Germany’s economic sentiment index tumbled from 48.5 to 36.8.
Comments are closed.