‘We remain convinced that the market is underestimating the further upside for inflation from here.’ – Alan Clarke, Scotiabank
UK consumer inflation climbed more than expected last month amid the sharp fall in the value of the Pound caused by Britain’s decision to leave the European Union. The Office for National Statistics reported on Tuesday that its CPI rose 2.7% on an annual basis in April, following the preceding month’s gain of 2.3% and surpassing analysts’ expectations for a 2.6% increase. British inflation is set accelerate further due the recent rebound in oil prices and the weak Sterling. In the meantime, core consumer prices advanced 2.4% in April, up from the prior month’s 1.8% climb and above forecasts for a 2.2% rise. Later in the day, the Labour Party pointed to rising inflationary pressures, promising voters to lower oil prices and boost wage growth. Despite the post-Brexit vote pickup in inflation, the Bank of England left its monetary policy and key interest rates unchanged last week, claiming that were no signs of overheating in the economy. April’s inflation climb was mainly driven by higher airfares, influenced by the timing of the Easter holiday. However, apparel, car taxes, food prices and the weak Pound also fuelled inflation pressures.
