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MNI DATA IMPACT: Weak UK CPI Gives Ammunition to BoE Doves>

By Laurie Laird and Irene Prihoda
     LONDON (MNI) - UK Consumer inflation fell by more than expected in 
December, while pipeline price pressures remained subdued, raising 
speculation a Bank of England rate cut may come as soon as month-end. 
     The following are the key points from inflation data published 
Wednesday by the Office for National Statistics. 
     -- CPI retreated to an annual rate of 1.3%, from 1.5% in November, 
falling below the BoE's 2.0% target for the fifth consecutive month, and 
remaining on track to match the MPC's expectation of the rate falling to 
1.25% early this year. 
     -- Weaker-than-expected inflation will greatly raise expectations 
of a rate cut at the MPC meeting at month-end. In a speech earlier, MPC 
member Michael Saunders declined to reveal whether he will renew his 
call for an immediate rate cut (after voting for a reduction at the 
previous two MPC meetings).  However, he did warned that a delay in 
reducing rates increased the risk of a "low inflation trap," an outcome 
he termed as "certainly not ... benign."
     -- Falling hotel prices shaved 0.09 percentage points from the 
change in CPI, with hotel prices extending an autumn decline. The 1.6% 
rise in the restaurant and hotel sector is the lowest since records 
began. An ONS official suggested the trend may stem from greater usage 
of price comparison websites when booking travel.    
     -- Pipeline inflation ticked modestly higher, largely due to the 
base effect of crude oil volatility in 2018. However, intermediate 
inflation remains weak by historical standards, with core output PPI 
declining to an annual rate of 0.9%, the slowest pace since June of 
     -- Intermediate inflation could remain subdued over the next 
several months, with the sterling effective exchange rate jumping by 
5.2%, the biggest rise since November of 2015. 
     -- House prices showed a flicker of life, in line with recent 
lending data. November's HPI increased by 2.2%, the biggest rise in a 
year, extending an upwardly-revised 1.3% increase in October. London 
cost rose by 0.2%, taking house prices in the capital 2.8% above the 
recent trough in May of 2019. 
-London bureau: 44 (0) 203 865 3812; email:

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