Global| Oct 16 2007UK Core Inflation Trends Turn Sharply Lower
Summary
The chart on the left shows why there is talk of a BOE rate cut on the horizon. Not only are UK house prices losing their upward momentum, but inflation in the core HICP (excluding unprocessed food and energy) is showing sequentially [...]
The chart on the left shows why there is talk of a BOE rate cut on the horizon. Not only are UK house prices losing their upward momentum, but inflation in the core HICP (excluding unprocessed food and energy) is showing sequentially lower rates of inflation.
Over the most recent three months, the headline HICP rate is actually negative. Over six months the rate of change in the HICP is only 0.6%. The BOE does not have an inflation range targeted but its main or headline gauge at 1.8% Yr/Yr is below its 2% mark. The core inflation rates are even lower and pointing to deceleration, sending a clear signal of inflation under control and possibly falling too rapidly.
| % MO/MO | % saar | ||||||
| Sep-07 | Aug-07 | Jul-07 | 3-MO | 6-MO | 12-MO | Yr Ago | |
| HICP | 0.1% | 0.1% | -0.3% | -0.4% | 0.6% | 1.7% | 2.4% |
| All Item RPI | 0.2% | 0.6% | -0.3% | 1.8% | 3.0% | 4.0% | 3.6% |
| RPIx | 0.2% | 0.3% | -0.3% | 0.8% | 1.9% | 2.8% | 3.2% |
| RPI excl Seasonally Adjusted Food | 0.2% | 0.5% | -0.2% | 1.9% | 2.9% | 3.9% | 3.6% |
| Food & Beverages | 1.2% | 0.6% | -0.9% | 4.0% | 5.0% | 4.2% | 3.4% |
| Housing and HH expenditures | 0.4% | 1.1% | -0.5% | 4.1% | 3.7% | 6.5% | 6.9% |
| Clothing & Footwear | -0.3% | -0.8% | 0.1% | -4.2% | -0.2% | -1.0% | -0.7% |
| Leisure Services | 0.4% | 0.6% | -0.1% | 3.8% | 2.4% | 3.4% | 2.5% |
| Leisure Goods | -0.3% | 0.3% | -0.1% | -0.4% | -3.9% | -3.2% | -1.5% |
| Motoring expenditures | -0.3% | -0.1% | -0.4% | -3.1% | 3.1% | 1.1% | -0.6% |
| Fares and travel costs | -3.6% | 1.6% | 0.0% | -8.0% | 2.9% | 6.0% | 0.2% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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