UK Inflation Remains Stable At 3%

UK Inflation Remains Stable At 3%”

Backed by lower prices of vegetables and fruits, the consumer price inflation eased to 5.07% in January from 5.21% in December, the government data showed. While the 10-year note is at its highest level since January 2014, today's high yield did not exceed its recent peak of 2.896% on February 12.

CPI measures the composite changes in the price of consumer goods and services purchased by households, such as transportation, food and medical care, over a period.

United States bond markets began the week on the back foot after comments at the weekend by Mick Mulvaney the White House budget director that interest rates could spike as a result of the new budget plans.

"But financial markets should not assume that any hike is a done deal".

In short, the report should not be taken too seriously.

"Our long-held view of higher United Kingdom rates and sterling still stands, but in the short term the politics, stretched market positioning and the state of the global risk environment may provide headwinds against the pound", said Nomura currency strategist Jordan Rochester.

Mr Brettell said it now looks like the next rise "may well happen in May".

Another London-based agent, James Cameron of Vesper Homes, says the uplift in first-time buyers seen a year ago is no surprise.

"Persistent inflation also has implications for the UK's ongoing cost-of-living squeeze".

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The combination made the Wednesday's data on consumer prices particularly important for traders, who said they wanted to gauge whether data from earlier in the month showing an unexpectedly fast pickup in wage growth was an anomaly or part of a broader trend of rising prices.

"We will be looking for an increase when the ONS reports next week".

Rising inflation expectations pushed stock prices lower, as investors see it as resulting in higher interest rates.

Firms plan to offer average pay settlements of 3.1 percent - the highest since 2008 - compared with 2.6 percent past year, the BoE said in an annual survey published on Wednesday. The inflation component of the 10-year yield rose by about 4 basis points, a very measured response.

"In our minds, one of the most likely scenarios from here is one of low or mediocre GDP growth but still elevated levels of United Kingdom inflation".

"In terms of the policy outlook, we think the BoE should wait until the sterling collapse effects have fully left the system before being able to assess the domestic demand impact on the headline inflation figures".

Scotland and south west England showed the highest annual house price growth, registering 7.7 per cent and 7.5 per cent respectively.

"Last week's MPC meeting would suggest another rate rise is just around the corner. What we do know is that this year has started fairly typically in that viewings and instructions are up although buyers are naturally nervous about making commitment until they see which way prices are moving" he says.

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