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Economy in Brief

UK Inflation Accelerates
by Robert Brusca March 24, 2009

UK inflation spurted in February quite unexpectedly. As the table shows, the month-to-month acceleration is quite widespread. UK core inflation continues to hover below the key 2% level, although it has ticked up this month too. Headline inflation has ticked higher and now stands at 3.2% Yr/Yr. Three-and six-month headline inflation show a sharp deceleration as you can tell from the included chart. UK statistics have been a bit mercurial with surveys showing much more weakness that the actual reports especially for things like retail sales. It is certainly too soon to develop angst over inflation trends in the UK. For the moment the month’s report is a curiosity. Surely economic conditions are still too weak to engender any significant inflation at this time. Still, Europe is the place that inflation is most feared. The BOE has been bolder than the ECB and ECB policies remain more restrictive than in the UK. Even so, having an inflation scare in a country so close to home, even a scare of minor proportions, is an issue. It is not the sort of thing that will get the kind of bold action from the ECB that the European economies still seem to need. The UK inflation blip is not good news.

UK HICP and RPI Inflation
  % MO/MO % saar
  Feb-09 Jan-09 Dec-08 3-MO 6-MO 12-MO Yr Ago
HICP 0.7% -0.1% -0.5% 0.4% 0.7% 3.2% 2.5%
               
All Item RPI 0.3% -0.7% -1.5% -7.4% -4.7% 0.0% 4.1%
RPI x 0.7% -0.1% -0.6% 0.0% -0.3% 2.6% 3.6%
RPI excl Seasonal Food 0.3% -0.7% -1.5% -7.7% -4.9% -0.3% 4.1%
Food & Beverages 1.6% 0.1% 0.5% 9.1% 6.1% 11.3% 6.1%
Housing and HH Expenditures -0.5% -0.9% -3.2% -17.1% -8.5% -2.7% 5.1%
Clothing & Footwear 0.8% -0.1% -3.2% -9.6% -8.2% -6.4% -1.5%
Leisure Services 0.4% 0.4% 0.2% 4.2% 4.7% 5.3% 3.1%
Leisure Goods 1.5% -0.1% -1.9% -1.9% -3.6% -3.6% -2.7%
Motoring Expenditures 1.9% -1.9% -2.3% -9.1% -16.7% -7.4% 5.2%
Fares and Travel Costs -1.5% -3.2% 4.8% -0.4% 2.8% 8.3% 3.8%
A RED highlight indicates inflation accelerating from pace of previous horizon
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