{"id":3000,"date":"2010-07-13T11:00:56","date_gmt":"2010-07-13T11:00:56","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=3000"},"modified":"2025-03-27T15:49:03","modified_gmt":"2025-03-27T15:49:03","slug":"uk-core-inflation-boosted-by-services-acceleration","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=3000","title":{"rendered":"UK &#8220;core&#8221; inflation boosted by services acceleration"},"content":{"rendered":"<p>The fall in annual consumer price inflation from 3.4% in May to 3.2% in June reflects a slowdown in fuel costs. &#8220;Core&#8221; trends remain stubborn, with a recent acceleration in services inflation providing further evidence that spare capacity is failing to exert the dampening impact expected by the Monetary Policy Committee.<\/p>\n<p>Other points:<\/p>\n<ul>\n<li>CPI inflation averaged 3.44% in the second quarter versus the Bank of England&#8217;s 3.30% estimate in the May <em>Inflation Report<\/em>. This is the fifth quarter out of the last six that the Bank has underestimated current-period inflation.<\/li>\n<\/ul>\n<ul>\n<li>&#8220;Core&#8221; inflation excluding energy, food, alcohol and tobacco moved back up to its recent high of 3.1% from 2.9% in May. <\/li>\n<\/ul>\n<ul>\n<li>Core resilience reflects a pick-up in services inflation from 3.0% in January to 3.9% currently. Inflation optimists argued that services trends would slow in response to excess capacity, with a weak exchange rate having less offsetting impact than in manufacturing. The recent acceleration, however, had been suggested by business surveys &ndash; see chart.<\/li>\n<\/ul>\n<ul>\n<li>Goods inflation, excluding energy and food, has fallen from 3.3% to 1.9% since January, partly reflecting a stabilisation of the exchange rate. Imported pressures, however, remain strong, with manufactured import prices rising by 5% in the first five months of the year, according to May trade figures released last week.<\/li>\n<\/ul>\n<ul>\n<li>The Bank is likely to be forced to revise up its forecasts of 2.54% and 2.28% in the third and fourth quarters significantly in the August <em>Inflation Report<\/em>. On conservative assumptions, inflation may average 2.75% in the fourth quarter before returning to 3% in early 2011 as VAT is raised.<\/li>\n<\/ul>\n<ul>\n<li>The second-quarter outturn of 3.44% compares with a central projection of 0.73% a year earlier in the May 2009 <em>Inflation Report<\/em>. Bank officials have deflected criticism of this forecasting failure but an internal review may be under way, with the Bank&#8217;s recent <em>Annual Report<\/em> stating that the budget contains an allowance for expenditure of &pound;2.4 million on a &#8220;new forecasting model&#8221;. <\/li>\n<\/ul>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/uk-services-130710.gif?__SQUARESPACE_CACHEVERSION=1279019781412\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The fall in annual consumer price inflation from 3.4% in May to 3.2% in June reflects a slowdown in fuel costs. &#8220;Core&#8221; trends remain stubborn, with a recent acceleration in services inflation providing further evidence that spare capacity is failing to exert the dampening impact expected by the Monetary Policy Committee. Other points: CPI inflation [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3000","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3000","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3000"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3000\/revisions"}],"predecessor-version":[{"id":5309,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3000\/revisions\/5309"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}