UK inflation, March 2024
Britain's inflation rate fell to 3.2% from 3.4% in March, the Office for National Statistics said on Wednesday, but a series of better-than-expected numbers prompted investors to back off bets on the Bank of England's first interest rate cut. did. .
Economists polled by Reuters had expected 3.1%.
The ONS said food prices were the biggest drag on the headline rate, while motor fuel pushed the headline rate higher.
The core figure, excluding energy, food, alcohol and tobacco, was 4.2%, compared to the expected 4.1%. Britain's services inflation rate, which is closely watched by monetary policymakers, fell to 6% from 6.1%, also better than economists and the BoE expected.
Investors this week have been keeping an eye on signs that Britain's labor market is cooling, with the unemployment rate unexpectedly rising to 4.2% between December and February. wage growth Meanwhile, the ratio excluding bonuses fell from 6.1% in January to 6% in February.
BOE Governor Andrew Bailey said on tuesday He saw “strong evidence” that rising interest rates were working to rein in inflation, which has slowed from a peak of 11.1% in October 2022. The central bank's own forecast is that inflation will fall to 2% in the short term. Aim for spring before it increases slightly.
However, a stronger-than-expected core index in March, firmly above 4%, suggests that inflation is more robust than recently expected and could push the first rate cut further down the line. be.
Market prices changed on Wednesday, with a majority of investors expecting the first rate cut of 25 basis points in September or November from the current rate of 5.25%, leaving the chance of a June rate cut at around 25%. ing.
There is also growing uncertainty about the future direction of central banks around the world. continued inflationary pressures In the U.S., analysts are wondering who will act before the Fed.
“Direction of the United States”
Camille de Courcel, head of European rates strategy at BNP Paribas, told CNBC's “Squawk Box Europe” on Wednesday that the latest data shows the UK is “moving in the direction of the US”. He said it posed a risk to his previous request for a June rate. Cut from BOE.
Labor data surprised the downturn, but the ONS warned that the month-on-month figures may have been distorted by methodological issues. This means the BOE's Monetary Policy Committee will focus far more on expected upside in wage growth and services, de Courcel said.
Some expect inflation to fall significantly next month due to the impact of year-on-year changes in utility prices.
Ruth Gregory, deputy chief UK economist at Capital Economics, expects April's data to be below the 2% target and the BoE will still opt to cut interest rates in June if inflation continues to fall in the coming months. That's a possibility, it said in a memo Wednesday. But the risk of inflation fueled by US-style stickiness and geopolitical tensions in the Middle East is high, he added.
of british pound rose against both USD and EUR After the announcement, the stock rose 0.3% against the dollar to $1.246, and rose 0.2% against the euro to $1.172.
British Finance Minister Jeremy Hunt, who is preparing for this year's national election, said on social media X that the inflation figures were “welcome news”.
Summarize this content to 100 words Britain's inflation rate fell to 3.2% from 3.4% in March, the Office for National Statistics said on Wednesday, but a series of better-than-expected numbers prompted investors to back off bets on the Bank of England's first interest rate cut. did. .Economists polled by Reuters had expected 3.1%.The ONS said food prices were the biggest drag on the headline rate, while motor fuel pushed the headline rate higher.The core figure, excluding energy, food, alcohol and tobacco, was 4.2%, compared to the expected 4.1%. Britain's services inflation rate, which is closely watched by monetary policymakers, fell to 6% from 6.1%, also better than economists and the BoE expected.Investors this week have been keeping an eye on signs that Britain's labor market is cooling, with the unemployment rate unexpectedly rising to 4.2% between December and February. wage growth Meanwhile, the ratio excluding bonuses fell from 6.1% in January to 6% in February.BOE Governor Andrew Bailey said on tuesday He saw “strong evidence” that rising interest rates were working to rein in inflation, which has slowed from a peak of 11.1% in October 2022. The central bank's own forecast is that inflation will fall to 2% in the short term. Aim for spring before it increases slightly.However, a stronger-than-expected core index in March, firmly above 4%, suggests that inflation is more robust than recently expected and could push the first rate cut further down the line. be.Market prices changed on Wednesday, with a majority of investors expecting the first rate cut of 25 basis points in September or November from the current rate of 5.25%, leaving the chance of a June rate cut at around 25%. ing.There is also growing uncertainty about the future direction of central banks around the world. continued inflationary pressures In the U.S., analysts are wondering who will act before the Fed.”Direction of the United States”Camille de Courcel, head of European rates strategy at BNP Paribas, told CNBC's “Squawk Box Europe” on Wednesday that the latest data shows the UK is “moving in the direction of the US”. He said it posed a risk to his previous request for a June rate. Cut from BOE.Labor data surprised the downturn, but the ONS warned that the month-on-month figures may have been distorted by methodological issues. This means the BOE's Monetary Policy Committee will focus far more on expected upside in wage growth and services, de Courcel said.Some expect inflation to fall significantly next month due to the impact of year-on-year changes in utility prices.Ruth Gregory, deputy chief UK economist at Capital Economics, expects April's data to be below the 2% target and the BoE will still opt to cut interest rates in June if inflation continues to fall in the coming months. That's a possibility, it said in a memo Wednesday. But the risk of inflation fueled by US-style stickiness and geopolitical tensions in the Middle East is high, he added.of british pound rose against both USD and EUR After the announcement, the stock rose 0.3% against the dollar to $1.246, and rose 0.2% against the euro to $1.172.British Finance Minister Jeremy Hunt, who is preparing for this year's national election, said on social media X that the inflation figures were “welcome news”.
https://www.cnbc.com/2024/04/17/uk-inflation-march-2024.html UK inflation, March 2024
