UK Inflation Slows As Expected In February
March 25 2020 - 4:29AM
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UK consumer price inflation slowed in February driven by motor
fuels and computer games and output price inflation reached its
lowest since mid-2016, data from the Office for National Statistics
showed Wednesday.
Consumer prices advanced 1.7 percent from last year, as
expected, slower than the 1.8 percent gain in January. This was
also below the central bank's 2 percent target.
Meanwhile, core inflation that excludes energy, food, alcoholic
beverages and tobacco, rose to 1.7 percent from 1.6 percent in
January. The expected rate was 1.5 percent.
On a monthly basis, overall consumer prices rose 0.4 percent
versus forecast of 0.3 percent.
The drop in CPI inflation to 1.7 percent in February was a small
sign of things to come, Ruth Gregory, an economist at Capital
Economics, said. She expects the effects of the coronavirus crisis
to drag inflation below 1.0 percent in the months ahead.
The Bank of England had cut its key rate to a record low 0.1
percent and expanded its bond buying scheme at an unscheduled
meeting last week to support to the UK economy amid the spread of
the coronavirus, or Covid-19.
Another report from ONS showed that output price rose only 0.4
percent annually in February, which was the lowest rate since July
2016.
Economists had forecast prices to climb 0.9 percent after rising
1 percent in January. Nonetheless, the annual rate has remained
positive for 44 straight months.
Month-on-month, output price inflation turned negative in
February. Prices dropped 0.3 percent, following a 0.2 percent
increase seen in January.
Input prices fell for the first time in three months in
February. Prices were down 0.5 percent on year, in contrast to a
1.6 percent rise seen in January. Economists had forecast a 0.9
percent fall.
Likewise, input prices decreased 1.2 percent on a monthly basis
after rising 0.3 percent a month ago. This was the lowest since
December 2018.
"In response to the developing COVID-19 pandemic, we are working
to ensure that we continue to publish our consumer price
statistics," the ONS said. The ONS said it is encouraging the staff
to work from home and to avoid unnecessary travel and social
contact.
The statistical office said it has an established infrastructure
to help mitigate the changes. However, there will inevitably be
challenges around some of collection activities.
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