While ongoing concerns about the impact of the referendum decision have seen worsening economic fundamentals prevail in certain areas of the economy, namely construction and real estate, one area that has surprisingly strengthened is inflation. After over a year of disinflationary pressure and a deflationary environment circling advanced economies across the globe, the UK saw consumer and producer prices pick up during the month of June. Annualized headline consumer prices rose to 0.50% during the month of June from the 0.30% reported during the prior release. Although monthly producer prices saw the pace of gains decelerate, input prices for producers fell by only -0.50% year over year, versus the -4.40% contraction reported in May. However, despite this resounding positivity towards trends in prices, it may complicate the Bank of England’s efforts to accommodate the economy. EURGBP is mostly unchanged on the session, trending near yesterday’s closing price of 0.8405.
UK Inflation Tops Expectations
Daily Analysis - 20/07/2016