MNI DATA IMPACT: UK Inflation Rises, May Prove Temporary>

By Laurie Laird and Irene Prihoda

     LONDON (MNI) - UK consumer inflation rose by more than expected in 

January, fueled by temporary energy price factors that are likely to 

reverse in months to come. 

     The following are the key points from inflation data published 

Wednesday by the Office for National Statistics. 

     -- Consumer price inflation rose by an annual rate of 1.8%, 

exceeding expectations. It remained below the Bank of England's 2.0% 

target for the sixth consecutive month, but above the central bank's 

expected springtime level of 1.25%. 

     -- Ofgem electricity price caps imposed in January of 2019 -- and 

not yet repeated in 2020 -- added 0.21pp to the change in CPI, while 

rising motoring fuel costs added another 0.12pp. Excluding erratic 

items, core CPI rise to 1.6% from 1.4% in December.    

     -- Pipeline inflation ticked higher, lifted by an 11.3% surge in 

crude oil prices in the year to January. Input PPI rose at an annual 

rate of 2.1%, the highest since April, with crude oil contributing 1.8pp 

to the total.

     -- Excluding erratic items, core output PPI rose by just 0.7%, the 

slowest pace since May 2016. With crude oil prices down by more than 15 

percent since early January, headline inflation could fall in months 

to come. 

     -- The next electricity price cap is due in April, providing 

further downward pressure in the second quarter. Disinflationary 

pressures on the horizon could provide the Bank of England with scope to 

consider a rate reduction should incoming data weaken. 

     -- House prices rebounded smartly, rising by 2.2%, the biggest rise 

since November 2018. London prices jumped by 2.3%, the quickest rate 

since October 2017 to sit just 0.9% below their recent peak touched in 

July 2017. 

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

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