MNI DATA ANALYSIS: UK January Inflation Steadies; PPI Falls>

-UK Jan CPI +3.0% y/y vs +3.0% in Dec

-UK Jan Input PPI +4.7% y/y vs +5.4% in Dec

-UK Jan Imported Materials Prices +3.5% y/y vs +5.2% in Dec

-UK Jan CPIH +2.7% y/y vs +2.7% in Dec

-UK Dec House Price Index +5.2% y/y, up from +5.0% in November

 By Laurie Laird and Jamie Satchithanantham

     London (MNI) - Consumer prices steadied in January, with a slowdown 

in petrol price rises keeping inflation in check, while intermediate 

inflation fell sharply. 

     The consumer price index increased by an annual rate of 3.0% last 

month, matching the MNI median forecast the 3.0% rise in December. 

     Transport prices rose by 3.4% in January, well below the annual 

rise in December, leaving the sector to subtract 0.05 percentage points 

from the change in CPI. Petrol prices increased by 1.1 pence a litre 

last month, after a 4 pence per litre jump in January of 2016, according 

to a National Statistics official. 

     The result was in line with the Bank of England staff forecast of a 

3.0% annual rise in January as reported in the February Quarterly 

Inflation Report. That takes inflation above the Bank's 2.0% target for 

the eleventh straight month. 

     But BoE staff forecasts were decidedly more hawkish than in the 

November Inflation Report. With oil prices rising over recent months and 

the Bank detecting evidence of higher pay awards, members of the 

Monetary Policy Committee discussed the possibility "that inflation 

could rise temporarily back above 3%," according to minutes of the 

February meeting. 

     Consumer prices fell by 0.5% between December and January, after 

rising by 0.4% between November and December, compared to the MNI median 

of a 0.6% monthly decline. 

     CPIH, which regained its status as a national statistic with the 

release of the July data, steadied at an annual rate of 2.7%, unchanged 

from December. CPIH had been downgraded as a national statistic, but the 

Bank of England continues to target CPI even with the recertification of 

CPIH. 

     Intermediate price inflation abated dramatically, with a rise in 

crude oil prices offset by a fall in imported materials costs, as the 

effective sterling exchange rate rise by an annual rate of 2.6% in 

January. 

     Producer input prices rose by 0.7% between December and January, 

for an annual gain of 4.7%, above the MNI median of 4.1%, but still the 

smallest gain since July of 2016. 

     Imported material prices, which comprise some two thirds of inputs 

to the manufacturing sector, rose by an annual rate of 3.5% last month, 

from 5.2% in December. This was the lowest the rate has stood since June 

2016. 

     Output PPI also decelerated, rising by 0.1% between December and 

January, for a 2.8% annual gain, below the MNI median of 3.0%, the 

slowest rate of increase since November of 2016.  

     Stripping out food and energy, consumer prices increased by an 

annual rate of 2.7%, up from the 2.5% pace recorded in December. A 3.3% 

increase in recreation and culture costs lifted core inflation, with 

admission prices to zoos and gardens falling by less than in January of 

2017. 

     Retail price inflation abated slightly, with RPI rising by an 

annual rate of 4.0% in January, down from a 4.1% pace in December, and 

below the MNI median of a 4.1% increase. 

     Bank of England Governor Mark Carney has recently acknowledged the 

RPI as a statistic with "no merit" and called for the government to 

abandon its use, particularly in the issuance of inflation-linked 

government bonds. However, a while a National Statistician termed the 

RPI a "historical statistic," he was unaware of discussions to 

discontinue the series. 

     Stripping out mortgage interest payments, RPI-X rose by an annual 

rate of 4.0% in January, after rising by 4.2% in December. 

     Meanwhile, UK house price inflation accelerated modestly in 

December, with the official House Price Index rising by an annual rate 

of 5.2%, up from the revised 5.0% annual pace recorded in November.  

     For the third straight month, London recorded the slowest growth in 

the country, with prices rising by just 2.5%, up from a 2.0% increase in 

November. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]