MNI DATA ANALYSIS: UK Mar CPI Ebbs on Falling Clothing Costs>

-UK Mar CPI +2.5% y/y vs +2.7% in Feb

-UK Mar Input PPI +4.2% y/y vs +3.8% in Feb as crude oil rises

-UK Feb House Price Index +4.4% y/y; London HPI lowest since Sept 2009

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - Consumer price inflation moderated more quickly than 

expected in March, dampened by the cost of women's apparel, as 

sterling-induced price rises of 2017 dropped out of year-over-year 

calculations. 

     The consumer price index increased by an annual rate of 2.5% last 

month, the slowest pace since March of 2017, below the MNI median 

forecast of 2.7%, after a 2.7% rise in February. 

     Clothing and footwear prices rose by a historically-low 0.7% 

between February and March, compared to a 2.0% jump in the same period a 

year ago, with the moderation concentrated in women's apparel, according 

to a National Statistics official. That subtracted 0.1 percentage points 

from the annual change in CPI. 

     Alcohol and tobacco prices slipped by 0.5% between February and 

March, as the absence of a March budget in 2018 eliminated a historical 

increase in tobacco duties. The sector shaved 0.09 percentage points 

from the annual change in CPI. 

     The result fell short of the Bank of England staff forecast of a 

2.8% annual rise in March, as reported in the February Quarterly 

Inflation Report. 

     While that takes inflation above the Bank's 2.0% target for the 

thirteenth straight month, consumer price inflation is falling more 

rapidly than expected, creating a potential dilemma for the Bank's 

Monetary Policy Committee. 

     However, minutes of the MPC's March meeting hinted at a near-term 

rise in the base rate from the current level of 0.5%. Members agreed 

that "an ongoing tightening of monetary policy ... will be appropriate 

to return inflation to its target ...". The International Monetary Fund 

support this stance in its World Economic Outlook released on Tuesday. 

     Consumer prices rose by 0.1% between February and March, after 

rising by 0.4% between January and February, compared to the MNI median 

of a 0.3% monthly increase. 

     Stripping out food and energy, annual core consumer inflation fell 

to 2.3%, the slowest pace of increase since March of last year, compared 

to the MNI median of 2.5%, down from the 2.4% pace recorded in February. 

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

release of the July data, declined to an annual rate of 2.3% from 2.5% 

in February. 

     Input price inflation accelerated, the result of an 11.6% jump in 

crude oil price in the year to March. That lifted producer input prices 

by an annual rate of 4.2%, falling just short of market forecasts of a 

4.3% year-on-year rise, after an 3.8% increase in February. However, 

input prices slipped by 0.1% between February and March. 

     However, output PPI moderated, rising by 0.2% between February and 

March, for a 2.4% annual gain, above the median forecast of a 2.3% gain, 

but the lowest rate of increase since October of 2016. 

     Retail price inflation also ebbed, with RPI rising by an annual 

rate of 3.3% in March, down from a 3.6% pace in February, below the MNI 

median of 3.6% increase. That's the lowest rate since March of 2017. 

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

rate of 3.4% in March, after rising by 3.6% in February. 

     Meanwhile, UK house price inflation continued to cool in February, 

with the official House Price Index rising by an annual rate of 4.4%, 

down from the revised 4.7% annual pace recorded in January, matching the 

slowest pace of increase since last June. 

     House prices in London fell by an annual pace of 1.0%, the first 

decline since September of 2009, when prices fell by 3.2%. 

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

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