United Kingdom firms plan biggest pay rises since 2008, boosting rate hike case

United Kingdom firms plan biggest pay rises since 2008, boosting rate hike case

"But there are signs that the dynamics in the labour market are finally driving some level of domestically generated inflation".

The consumer price index rose 0.5 percent from the previous month, above the median estimate of economists for a 0.3 percent increase, a Labor Department report showed Wednesday.

The single biggest contributor to the unexpectedly high increase in the Core CPI (0.3% vs.an expected 0.2%) was a big jump in the price of apparel.

The market is down roughly 7 percent overall from its January 26 high.

The dogs that didn't bark were the United States dollar, virtually unchanged after the number, and the real (inflation-adjusted) U.S. 10-year yield, which is slightly down.

In terms of the United Kingdom nations, average prices in England rose 5.0 per cent to a typical £244,000; Wales saw an increase of 5.4 per cent to stand at £154,000; in Northern Ireland prices grew 4.3 per cent to £130,000.

The US snapback looks set to spill over into this morning's European open and while further gains are a welcome development, they remain small potatoes in the context of recent losses, to paraphrase out of context, recent comments by William Dudley of the New York Fed.

On a month-on-month basis, the core sub-index increased by 0.68 per cent in January 2018 was higher from 0.51 per cent recorded in December.

USA dismisses fears of wider war in Syria
This latest attack raises questions about whether USA troops might exchange fire with Russian forces, which back Assad. A US -led coalition in Syria killed more than 100 troops allied with Syrian President Bashar al-Assad on Wednesday.

Consumer price index (CPI) rose 5.07 percent in January from a year earlier, data released by the Ministry of Statistics showed on Monday.

The year-over-year increase in prices was moderated by sharp price increases in January 2017, when headline inflation rose 0.6%, the sharpest rise in four years. It was trading at US$1.3892 by 1650 GMT, up 0.4 per cent on the day, having climbed more than six per cent against the dollar over the past three months.

Today's inflation report shows prices rising across a broad spectrum of categories, not just energy. Meanwhile, soft retail sales are probably the result of two factors - one, adverse weather shuttered sales at the start of the month (e.g. motor vehicles -1.3%); two, January may be a "pause to refresh" after a gangbusters 4Q.

"It seems domestically driven inflation could seamlessly take over from the sterling-related price rises we have seen since the Brexit vote". Higher borrowing costs slow economic growth.

If the market believed that the CPI surprise represented a trend rather than a blip, it would bid up real yields, expecting the Federal Reserve to raise interest rates in the future (expectations about the future federal funds rate are the big near-term determinant of real yields).

Economists now expect the Monetary Policy Committee to hike rates from 0.5pc to 0.75pc in May.

The central bank's preferred gauge of inflation - a separate figure based on consumer purchases and issued by the Commerce Department - has mostly missed its 2 percent goal in the past five years.

Related Articles